Reviewing the City’s 2026 Proposed Budget

---

In early October 2025 Mayor Kathy Sheehan announced the City of Albany's 2026 Proposed Budget.  The budget outlines nearly $229 million of revenues and expenditures, a growth of 3.2% of spending from the City’s 2025 Adopted Budget of $222 million.

While we commented on the City’s budgets from 2017 to 2025 in an article earlier this year, this is the first year we have had a chance to analyze and comment on a budget while it is under development.  With this article we have analyzed the year-over-year changes in spending and expenditures, reviewed the presentation of department goals and associated spending, and evaluated the communication of the budget.

This is different from other articles we have written.  We aren’t presenting any data tables and commentary, rather we have reviewed the Budget Book pdf and included comments in-line.  

When we review a budget - whether the City’s budget, a non-profit’s budget, a pubic company or more - we look for two things:

1. Budget content - the spending, any changes in spending, the programs associated with spending and their goals
2. The behaviors surrounding the budget - can we tell how the budget was constructed, how is the budget and its detail communicated, and how understandable is it by any stakeholder

As we review the budget we also have a primary concern.  Macroeconomic conditions and the political environment could have a dramatic impact on the flow of NY State and Federal funding to our City.  We want our budget to be constructed in a risk conscious manner.

Lastly, what do we want from a budget?  What is our goal?  We want the best possible budget that provides direction and allocates finite resources to the 1200 member team that powers the City of Albany.  We want a budget that all stakeholders, including the Citizens of Albany, can read and understand.

Download the pdf below, 2026ProposedBudget_ADSComments_3.pdf, and open the pdf in Microsoft Edge, Google Chrome, Adobe Acrobat Reader or any other tool that can display a pdf.  Comments will be highlighted.  The image above shows the pdf displayed in Chrome with a highlighted comment.  Hover over any comment to see the full text.  Note that you will see "karla" prefixing all comments; this is simply a tag for the original commenter.

The budget book contains around 125 comments that include requests for clarification, requests for more information, challenges to the manner that facts or information are presented, and other themes.  Below we will identify a few themes in our comments and provide an example for each.   

Note that many of our comments are not mutually exclusive in terms of themes.  A comment about a budget item might be an example of a lack of risk management and a lack of explanation or specificity.  

Budgets show change - new line items are added, line items disappear, the value of budget expenses increase and decrease.  It is natural.  All of these puts and takes need to be explained.  

We focused on revenue and expenditures where we saw dramatic (+/-10%) and significant (> $10k) growth or decline.  Any decline in an expenditure should be explained - did the need go away?  Was the prior year a one-time expense?  Any dramatic increase in a revenue item should include context - what factors support the growth?  Is there any possibility that we won't achieve the budgeted growth?

As an example, on Page 19 (image above) there is a Permit-related revenue item, "Street Openings", where revenue growth is 47% between our 2024 Actuals of $511k (the last year where we know the results) and our 2026 proposed budget of $750k.  Because the first year of this growth happened in the 2025 Adopted budget we note “Do the 2025 Actuals support this growth in revenue and how that growth is being sustained in 2026?” 

Any department goal that looks Medium, L or XL should have accompanying commentary that answers two questions - can the department achieve this goal with existing personnel, operating budget and capital expenditures or is new spending required?  If the latter, what are the details and where do they show up in the budget?   

We want to see the linkage between goals and expenditures for several reasons.  If a goal is expressed as "we can do this with our existing team and tools" or "we can accomplish this goal with $100k listed in our Contractual Expenses" section then we know that the goal has been thought through.  We want to weed out the goals that haven't been thought through or that will have mid-year, unplanned asks like "to accomplish Goal X we will need $400k that is not in our budget."

There are numerous examples of goals and initiatives not connected to budgets.  On page 23, the Mayor's budget presents a goal "Launch a business attraction and retention strategy as part of

a broader equitable economic development strategy for Albany."  This is a goal that merits more communication, at the least it sounds medium-sized.  Does this require additional funding?  Is it being paid for out of the Contracted Services line?  What is the "broader equitable economic development strategy" that this goal fits into?

The 2026 Proposed Budget importantly contains descriptions of 2025 accomplishments.  When done right and accurately this is an important way to understand the strategy and budget stewardship.  We get to see the accomplishments that our prior year's budget "bought" us.  However we get concerned when various accomplishments are presented as fact when, in actuality, they are questionable statements.  

For example, the Office of Audit & Control narrative lists out the publication of various audits that cannot be found anywhere on the City's website.  This is important because we want our audits to catalyze some form of action or impact in future years.  An audit in year 1 could save us money in year 2.  An audit in year 1 could precipate new spending in year 2 related to audit-driven actions. 

The Office also claims "Saving" the City $8.7 million; this is an inaccurate and misleading presentation of their accomplishment.  In accounting terms this should be communicated as "loss prevention."  "Cost savings" is "the actual measurable reductions in current or existing expenses" which is not what the Office of Audit & Control achieved.

The term “Interfund” is used twice in the budget -  “Interfund Transfers” ($350k, listed as an expenditure category on page 13) and “Interfund Revenue” ($4.6 million of revenue on page 19).  The term is overloaded with little supporting information and definition.  We sat in a budget review meeting and heard Common Council members ask for explanations; clearly this is not an accessible part of the budget.

While page 148 provides a definition of “Inter-fund Transfers”, it is “An internal transaction that moves money from one major fund to another in furtherance of maintaining a balanced budget and recognizing spending appropriately”.  This is a fairly low-value definition that is not understandable by most budget readers - what is it? why does it exist? is it a good thing or a bad thing?  What is the reasoning behind the 50+% growth in Interfund Revenue year-over-year?

We use the phrase "Lack of Decision Context" when we see spending that is good, positive, & we all agree it's necessary... however we don't take these numbers at face value.  We want to understand more about how the number was arrived at.

Take "Street Reconstruction" which appears in the Capital Improvement section on page 124.  Street Reconstruction is our largest capital improvement expenditure, year after year.  In 2026 we will use State and Debt financing for $14,468,000 of Street Reconstruction.  Our current plan shows the same spending in 2027, 2028, 2029, and 2030.  Why?  Why the same amount year-over-year?  What are we getting from this spend?  How many miles, yards, potholes or whatever metric is this spend buying us? 

We like good, safe, well-paved roads.  Maybe we spend more?  Our biggest Capital Improvement line item ($72 million over 5 years) deserves more context.

Risk management has many meanings in the context of a budget.  Risk management can mean that you will put hedge statements beside positive items that may not come to pass ("if X doesn't happen then Y could be at risk").  Risk management can convey how you will act if externalities (e.g. macroeconomic conditions) do not tip in your favor.  Risk management can simply be broad statements of potential risk that you are acknowledging that may impact our City and budget.

We found only a single recognition of macroeconomic factors in the budget:

"Inflation has slowed, but due to the shortsighted tariff expansion and other economic uncertainties created in part by the disastrous decisions of our current federal administration, our residents know all too well the impact increased costs for energy, food, and other items are having on their household budgets. The City is also subject to the same economic forces, and this budget appropriately funds amounts necessary to provide the level of services our residents deserve."   

However the statement could not credibly be called a reaction or a disaster reaction plan to Federal administration policy.

As an example, the Proposed Budget expects a $700k growth in our Capital City Funding from New York State.  A reasonable question is "what is the certainty that this funding will come through and, if it does not, what actions will we take?"

People and people-related costs are the biggest component of the budget, as they  should be.  Headcount is never static, it's alway changing, and we want to understand headcount in various dimensions.  

We expect a budget to...

• have a table reviewing the summary headcount and its growth or decline
• describe exceptional changes to personnel strategy
• validate any net new headcount - what will the position be focused on? why are we hiring?
• explain investments that cut across organizational boundaries to understand alignment

As an example of the second point, the Police budget eliminates 10 "Police Officer" positions and adds 12 "Special Patrol Officer" positions.  This represents a change in how we are spending between $1.5-2 million in APD costs and there is no explanation.  We did receive an explanation from someone, that (if we heard correctly) it is a program to bring back retired officers to fill positions.  This initiative requires more explanation as it can help close the gap in our police staffing.

An example of point #4 is our net new investment in Communications staffing.  There are four net new positions with the word "Communications" in their title being hired in 3 different departments.  We would want to understand the coordination between these hires and if someone has sussed out an ability to create a shared Communications service that could eliminate 1 or more of these net new positions.  

By its nature our focus on the 2026 Proposed Budget is a criticism.  We are pointing out flaws and shortcomings.  We also recognize that a lot of good faith work has gone into the creation of the budget.  Our critique is on the work product and the process, and is not a critique of the individuals involved.  We would also point out that some percentage of our comments are likely incorrect or a misread on our part; we accept that someone closer to the budget will rightfully correct us here and there.

That being said, our budget process and budget output needs improvement.  As we publish this article and analysis we are in the middle of budget discussions and within weeks of a vote on the budget.  We would hope that some components of our analysis will influence the discussions and the desire to seek more data and explanation.

We would go back to what we said at the beginning of this article - our goal should be to have the best possible budget that provides direction and allocates finite resources to the 1200 member team that powers the City of Albany.  We want a budget that all stakeholders, including the Citizens of Albany, can read and understand.  The current budget, as presented, does not accomplish this goal.