Albany committee hears midyear budget review; finance director says balanced year-end still likely

Raina Schwartz, the city’s finance director, told the Albany City Council Standing Committee on Audit and Fiscal Sustainability that the city expects to reach a balanced FY26 budget but that getting there will be "hard fought." She emphasized that large, front-loaded costs such as pension and insurance payments and two large retirements pushed year-to-date expenditures above 50 percent while some revenue streams — notably sales tax and certain franchise fees — lag in cash receipt timing.

"We will be at a balanced budget at year end as well," Schwartz said, adding that staff will monitor results and bring forward recommendations if adjustments are needed. She described the change between the Q4 estimate and the audited comprehensive financial report as a reconciliation in reporting rather than an actual loss of cash, and said the audit review surfaced bookkeeping mismatches that were corrected.

The presentation explained two structural drivers of the midyear figures: timing differences in revenue collection and a set of large, early-year expenditures. Schwartz said sales-tax receipts appear soft and are likely to come in under budget after accounting for known timing lags; conversely, property-tax collections are running stronger than budgeted and are expected to finish slightly over budget based on assessor estimates.

Committee members pressed staff for clarifications. A member asked whether construction-permit revenues simply offset the community-development costs tied to plan review and outside consultants; Schwartz replied that out-of-pocket consultant costs rise and fall with permit activity but city staffing costs are largely fixed, so increased permit revenue does not fully offset personnel costs. She also clarified that the property-tax line in the general fund represents the city's portion of the 1 percent base levy (secured and unsecured), while special tax levies and user-fee revenues generally flow into restricted funds.

On personnel liabilities, Schwartz said sick-leave conversions to CalPERS service credit are capped at 1,440 hours for most employees (firefighters have a different, higher cap in practice), and vacation caps generally run at about twice the annual accrual under memoranda of understanding. She told the committee the city's UAL (unfunded accrued liability) payment was budgeted near 3.7 (as discussed in the meeting) and noted that upcoming CalPERS actuarial and methodology changes, and market returns, will affect future contribution rates.

The finance director recommended no midyear adjustments to the adopted budget at this time. "There are no adjustments recommended at this point," she said, but added staff will return with specific recommendations if misalignments persist as the fiscal year proceeds. The presentation closed with staff offering to provide more granular analyses requested by members, including a breakdown of how much property-tax growth reflects turnover versus improvements.

The committee paused for questions and thanked finance staff for the detailed review; the item concluded with the chair moving on to the investment report.