Albany standing committee reviews proposed 2025–26 budget; warns of 2026–27 shortfall

City of Albany officials presented a proposed biennial budget to the City Council’s audit and fiscal sustainability standing committee on Monday, May 12, 2025, saying the draft for fiscal year 2025–26 is balanced but that fiscal year 2026–27 currently shows a roughly $1.112 million shortfall driven by pension obligations and rising labor costs.

Finance Director Rena, who led the presentation, said the administration had "right sized" revenue estimates and used transfers and special revenues to limit general-fund exposure. "The proposed budget for fiscal year 25–26, for the first time in many years, is balanced," she said, adding that the city had tightened revenue assumptions after stronger-than-expected actuals in the prior cycle.

The nut of the discussion was that balancing 2025–26 depends on several moving parts. Staff told the committee Albany remains heavily reliant on property tax—assessor preliminary estimates showed about 3.7% growth for 2025–26—but sales tax is softer following the closure of Golden Gate Fields and investment earnings are uncertain. The presentation also flagged growing pension costs: an 8.7% increase in the city’s unfunded actuarial liability payment line—about $300,000—contributed to longer-term pressure.

Staff outlined specific revenue and expenditure adjustments. New or renewed revenue sources in the proposal include a planned transfer from the sewer enterprise fund to the general fund to cover shared overhead that had not been shifted in prior biennial cycles. Public-works special revenues (landscape and lighting districts, parks assessments and similar sources) were maximized to fund eligible operating work and to preserve capital funding. Within the police budget, state COPS funding was identified to support an administrative-sergeant position; staff noted that the COPS transfer (about $184,000, as discussed in the meeting) accounts for much of a reported increase in police revenues.

On labor and benefits, staff said contracts and cost-of-living adjustments are a major driver of expenditure growth. SEIU-covered employees are proposed to receive at least a 3% COLA plus 1.5% in equity adjustments; management adjustments are similar; police and fire contracts carry larger increases—roughly 5–6% per year in the two-year cycle. Finance staff said that if all increases flowed to the budget without offsets, labor costs would rise by roughly $1.8 million; using three currently unfunded positions and an explicit salary-savings assumption limits the projected increase to just under $1 million over the cycle.

The committee also reviewed enterprise and special funds. The sewer enterprise currently generates revenues that exceed operating costs because much of the revenue is reserved for capital projects; staff noted the Brighton Sewer Project as a forthcoming capital item that will tap those reserves and that a sewer fee study is underway (no sewer fee increase is proposed at this stage). The EMS fund was described as stable and, in some cases, absorbing costs previously budgeted in the general fund to better align costs with service demand and ambulance-billing revenue.

Committee members asked for clarifications on a range of items. Member Jordan said she was "ecstatic" that turnover and salary savings were now explicitly included in estimates. Multiple members pressed staff about year-to-date actuals and how the presentation reconciles with the Annual Comprehensive Financial Report (ACFR); Rena said the FY23–24 ACFR basis includes unrealized gains that presentation projections exclude for budgetary clarity. Assistant City Manager Isabelle and Rena explained that the city redistributed risk-management duties after a longstanding risk-management position remained vacant; those duties are now shared across departments and managed with the city’s third-party risk pool.

Council members discussed possible revenue options if future deficits persist. Staff and members spoke about the timing and cost of ballot measures: a restructured business license tax or other local-tax measures could be a revenue option, but timing matters for whether a measure can take effect for a given fiscal year. Members also noted that ARPA-funded support for some community events ends in December 2026 and that the council discretionary account includes limited ongoing support (discussed at roughly $35,000) for events like Stroll and Strollish.

Rena closed by outlining next steps: a full council workshop/presentation on May 19 for feedback and a public hearing and proposed adoption on June 2, at which the council will also be asked to adopt the master fee schedule, the investment policy and pension tax rates needed to place partial tax rates on the 2025–26 rolls. The committee did not adopt the budget on May 12; it received the presentation and asked questions.

Votes at a glance: The committee approved the meeting minutes at the start of the session. Member Jordan moved approval; the seconder was not specified in the record available to the committee. The minutes were approved with recorded affirmative responses from Member Jordan and Chair Mikey.

The committee’s discussion identified several items staff said they would return with more detail: the full departmental budget breakouts and staffing detail on May 19; the master fee schedule, investment policy, appropriations limit and required pension tax-rate items for June 2; and the sewer fee study results when available. Staff repeatedly cautioned that projections carry uncertainty—particularly sales tax and investment earnings—and that the June 2026 budget process will provide a fuller basis for decisions if trends hold.

Ending note: Committee members praised staff for aligning budget estimates more closely with recent experience and emphasized the need to monitor pension liabilities and labor costs as the city moves toward final adoption later this spring.