The City of Albany is borrowing $10 million to cover operating costs through the end of the year, a loan that could cost Albany hundreds of thousands of dollars in interest.
The city notified potential investors that it would sell the debt on Nov. 24. The city expects to pay the debt back by next February.
City Treasurer Darius Shahinfar says the city normally draws on its reserves to cover expenses while it waits for income, but those reserves are depleted.
"We've done everything we can, but I think we're going to need to do this to make sure that we basically advance the payment, our sales tax payment from January, to get that now and meet our obligations," Shahinfar said.
The loan comes as Albany faces lower than budgeted revenues and a growing deficit. A pair of recent reports from the New York State Comptroller's Office found that the city was facing a $26 million budget gap for this year (up $4 million from city estimates this summer) and was the second-most fiscally stressed municipality in the state. The city is facing a projected $35 million budget gap for 2027.
The loans will cost the city somewhere between $100,000 and $200,000 in interest, according to Shahinfar. The exact amount depends on the interest rate Albany gets, and how much they make off investing money they'd otherwise be using to make ends meet.
Albany had just over $8.5 million in its general fund balance in September, according to the city's most recent monthly cash balance report.
Common Council member Deidre Brodie took to social media to criticize the administration for not doing more to publicly discuss the debt sale and the fact that "the city is broke."
"I think that's actually, unfortunately, the best of the worst decisions we have in front of us," Brodie said in an interview Monday. "I think there is absolutely the need to borrow to make sure we are solvent. It's how we got there and how we're not talking about it. That's the issue."
Albany last issued debt to cover operating expenses in 2016.
