The City of Albany's last two municipal budgets contained "significant revenue and expenditure estimates" that were "not reasonable," a report from the New York State Comptroller's Office found.
The report, which was released Wednesday, found the city "did not prepare budgets using realistic estimates based on historical trends, actual results and the most current and accurate information available." It also concluded that the city would have an operating deficit of $26 million by the end of 2026, up from the $22 million deficit predicted by city officials earlier in the year.
“Albany’s financial challenges did not begin with the most recent budgets. The city has experienced fiscal stress for years and used temporary federal pandemic aid and fund balance to pay recurring expenditures, including staff salaries," New York State Comptroller Tom DiNapoli said in a statement Wednesday. "Addressing these challenges will require city officials to better align recurring revenues and expenditures with operational resources and needs."
The report is the latest in a series of bad financial news for New York's capital city. Another recent state comptroller's report found Albany was the second-most fiscally stressed municipality in the state. Officials in the Mayor's Office recently told the Albany Common Council's Finance Committee that the city still has an eight-figure budget gap, despite an infusion of $20 million in state aid for the year. Members of the Common Council have entertained raising taxes above the state's tax cap to address the gap.
The state comptroller's report was prepared after Albany Mayor Dorcey Applyrs, members of the Common Council and some taxpayers asked DiNapoli to give the city's finances a second look.
The report comes one day before Applyrs is set to release her proposal for the city's 2027 budget on Thursday.
The mayor welcomed the latest comptroller's report in a statement Wednesday afternoon. She also said she was "pleased" with the recommendations his office laid out and that they reflect the approach her team took to drafting a 2027 spending plan.
"The report reinforces the significant fiscal challenges the City was facing when my Administration took office and is consistent with the State Comptroller’s recent assessment of Albany’s financial condition at the end of 2025," Applyrs said in the statement. "Since then, we have focused on confronting those challenges directly, strengthening financial oversight, improving the accuracy of our budget assumptions, and putting the City on a more sustainable long-term path."
Applyrs described her budget proposal as "a soundly balanced budget that stabilizes Albany’s finances and puts us on a multi-year path to fiscal sustainability."
The city's current budget crisis comes after it used the last of its $80.7 million in COVID-19 pandemic-era American Rescue Plan Act funding in December 2024. The comptroller's report found that the city's usage of temporary funding for recurring costs, including to fill payroll gaps, "contributed to budget shortfalls."
"The City relied on temporary and other nonrecurring revenues to fund recurring operating expenditures," the report said. "Continued reliance on these funding sources increases the risk of future budget gaps when the funding is reduced, discontinued or otherwise unavailable."
In addition to overestimating several significant revenue streams, the report found that the city underestimated several expenses. In the 2025 budget, the city spent $3.6 million more than expected on police overtime and $2.5 million more than expected on health insurance for retirees.
City officials only budgeted $100,000 in the city's contingency accounts, or "rainy day" funds. Those relatively small allocations represented less than 1% of the city's annual spending and "provided minimal flexibility to address unforeseen expenditures."
The Comptroller's Office noted that it does "not offer comments or make specific recommendations on public policy decisions, such as the type and level of services under consideration to provide."
