Officials in Albany already knew the city’s finances were in a rough spot, but a recent midyear budget report from the mayor's office is painting an even more dismal picture.
City lawmakers are now asking the mayor’s financial team for answers as they work to come up with solutions. Capital Region Bureau Chief Grant Ashley joined Lucas Willard on Northeast Report to discuss the council’s finance committee meeting Wednesday night.
INTERVIEW TRANSCRIPT
Editor's note: This conversation has been lightly edited for clarity.
Willard: Albany Mayor Dorcey Applyrs released this mid-year budget report over the weekend. What's in the document?
Ashley: Applyrs announced previously, the city is getting $20 million in additional state aid this year, and over the next two years, it will get another $40 million.
Despite that, things are not looking up for the city.
Albany still has a $22 million budget gap. Some revenue projections were overly optimistic. Costs are up for health insurance, retirement, wages, benefits, and overtime is a problem too. Next year, they have a projected budget gap of over $33 million. That's a worse picture than projected earlier.
Administrative Services Commissioner Miriam Dixon told the council's finance committee that the new numbers are the result of a more thorough review by the Applyrs administration.
Dixon: The financial picture we are presenting tonight is not the result of one new expense or one revenue source suddenly disappearing. It is the result of six months of examining the budget line by line, reconciling actual financial activity, reviewing departments individually, and comparing the assumptions contained in the adopted budget against what is actually costing to operate the city.
Willard: What is the city actually doing to close this year's budget gap and whittle down the projected budget deficit that is already in the works for next year?
Ashley: Everyone I talked to said this is going to take multiple years to get right, to get the city in a better financial position.
Applyrs's office says they've done a department-by-department review of spending. They've put together controls on hiring and limited non-essential spending. They've put a lot of infrastructure projects on ice. They've tried to get private investment for certain programs.
Applyrs also signed Local Law "I" this week. That bill requires the common council to approve budget transfers and appropriations of over 4%.
Applyrs signed it, but she said she had reservations that this weakens the city's board of estimate and appropriations, and that it was done without a referendum.
She says a change this significant should require public input, but that didn't really seem like enough for some of the common council members who were at the committee meeting.
They asked a lot of tough questions. Finance Committee Chair Meghan Keegan asked Bob Ward, the mayor's budget advisor, whether the city was going to go into deficit spending this year, and this was the rest of that exchange. So first, Ward responds, and then Keegan follows up.
Ward: We are looking at all options.
Keegan: I mean that that's really difficult to do going into Q4 because we're essentially going to hit Q4 in about a month and a half. Almost impossible to put cost controls in place to come in where we need to be.
Willard: With challenges ahead, what options does the city actually have moving forward to reduce spending?
Ashley: The state's already giving Albany $60 million in new funding over the next three years, so it's a tough sell to get them to contribute more. There are some council members who think the state should be committing more on an ongoing basis, since so many state buildings are in Albany, and those buildings don't pay property taxes.
Willard: Typically, this has been something that Albany city leaders have gone to the state legislature every year, saying we need this $15 million or so to help pay for all these state buildings.
Ashley: The state currently gives the city $15 million every year for Empire Plaza.
Since that takes up so much space, it's going to be a tough sell. The city can raise taxes; they're almost certainly going to do this.
Keegan told me earlier this week it's possible that they override the tax cap. That's a limit on tax increases set by the state. If the city wants to raise taxes higher than that cap, the common council just has to approve it by a 60% margin.
An aide for Applyrs told me they didn't ask for that proposal to be introduced, but they did say it's on the table, like everything else. But if you raise taxes too much, you risk political backlash plus the cost of renting and property in the city would go up. Keegan kind spoke to those concerns after the meeting.
Keegan: If you start to price people out of being able to afford to live here, you will see sort of your higher income tax base start to leave for other areas that are more affordable, and that's not going to leave the city in a good financial position either. There really are no good options for us right now.
Ashley: The last option is for the city to spend less. They talked about some ways they could change health insurance or shift coverage to make that up. It's also worth noting that public safety is more than 50% of the budget. That's been a main priority for Applyrs and Councilmember Alfredo Balarin was pretty clear about what those cuts would mean for public safety.
Balarin: You can't do cuts without cutting public safety, and that's something I think we can have a much deeper conversation about.
