Last month, Mayor Dorcey Applyrs announced that the city had ended the 2025 fiscal year with a $15 million structural deficit that could grow to $22 million in 2026.
Will Waldron/Times Union
ALBANY — The city is confronting a multimillion-dollar budget deficit and that could jump to tens of millions of dollars by the end of the year. It remains to be seen how the city will emerge from the crisis.
Here are some of the key questions and some answers to them:
Article continues below this ad
How much is the deficit and how did it get so big?
The city’s fiscal year runs from Jan. 1 to Dec. 31. On March 20, Mayor Dorcey Applyrs announced that the city had ended the 2025 fiscal year with a $15 million structural deficit that could grow to $22 million in 2026.
“The revenue just did not come in, in many, many places,” Deputy Mayor Christopher Ellis said of the 2025 shortfall at a recent Common Council meeting.
The mayor’s office last week released a document breaking down $14 million of the shortfall:
Article continues below this ad
Make the Times Union a Preferred Source on Google to see more of our journalism when you search.
Add Preferred Source
• $4.2 million in expired federal aid and public safety grants
• $2.67 million in lower than projected sales and use tax revenues
• $2.46 million in reduced speed camera collections
• $1.99 million in lower-than-anticipated receipts from payments-in-lieu-of-taxes agreements approved by the city
• $314,000 shortfall in property tax revenues
• $2 million in unplanned overtime expenses across departments as the city manages increased public safety needs for permitted events
On Tuesday, Chief City Auditor Sam Fein, Applyrs’ successor leading the city’s Office of Audit and Control, released a report detailing persistent issues in how the city evaluates what it will collect in sales tax.
It found that, dating back to at least 2023, the city was basing its expected sales tax revenue on projections from the previous year rather than how much it actually received in sales tax from Albany County. The differences between the projected amounts and the real figures are large and have grown every year.
Article continues below this ad
The document says the difference amounted to $1.69 million in 2023, $1.94 million in 2024 and $2.67 million in 2025.
The picture for 2026 beyond the projected deficit of $22 million remains unclear, in part because the city has not released financial reports for the fourth quarter of 2025 or the first quarter of 2026. The city’s 2025 books remain open because of the deficit, which means the city cannot move on to its report for the first quarter of 2026, Treasurer Darius Shahinfar said Friday.
The mayor’s office sounds bearish on the city’s take so far this year. Revenues in 2026 are coming in “well below projections,” Applyrs’ office wrote in a statement last week.
At an April 15 meeting of the Common Council’s Finance, Taxation & Assessment Committee, chair Meghan Keegan explained some of the city’s largest expenses and the costs associated with major recent city projects. In an illuminating presentation, she noted that nearly 75% of all city spending goes to wages, benefits and retirement costs.
Article continues below this ad
She noted the city has not been made whole on four major projects: the Lincoln Park Pool, the Albany West Community Center, the Hoffman Community Center and the replacement of the City Hall roof.
The city had to put up $17.4 million in cash raised through bonds, which would be reimbursed through grants and other funding streams, in order to move forward on the projects. Not all of it has been paid back to the city.
“We reached a sort of critical mass in capital projects, and that may not have been the best decision,” Keegan said. “It certainly made it very difficult for us to pay bills, in some cases, pay contractor bills, which delayed completion of some projects.”
She questioned the wisdom of attempting that many major projects in a single fiscal year.
Article continues below this ad
When did city leaders realize there was a problem?
This has been a touchy subject around City Hall. Applyrs’ announcement of the budget crisis came over a month after the state Legislature’s Joint Legislative Budget Hearing — Local Government, better known as “Tin Cup Day.” That is the yearly budgetary exercise in which leaders from cities across the state try to extract the maximum possible aid from the state Legislature.
“Every incoming mayor, at least some vocally — Buffalo and New York City — were talking about huge budget deficits,” Ellis told the Common Council in reference to Albany’s Tin Cup Day efforts.
“We hadn’t seen that yet. Or at least the alarm hadn’t been pulled. The difference between New York City and Albany, New York City’s fiscal year is July 1 through June 30, so they’re very aware of where they are. We had just come out of the end of the 2025 fiscal year so we didn’t holler and scream about the budget situation.”
Article continues below this ad
Still, there were warning signs about a worsening fiscal position for the city dating back to at least November 2025. The city’s third-quarter financial report explains some of it. Shahinfar, whose office is responsible for compiling and releasing the figures, wrote that revenues were “underperforming compared to budget, while expenditures are trending higher across multiple categories.”
He wrote that total revenues were down over 9% from the 2024 fiscal year.
“Economically driven revenues — mainly sales and other taxes — are underperforming budgetary predictions,” the report stated.
His synopsis also called for changes: “Reductions in discretionary and non-essential spending are necessary,” he wrote.
Article continues below this ad
Another warning sign came in December when the city’s Board of Estimate and Apportionment approved a $6.4 million transfer to cover employee benefits and police overtime. The entirety of the city’s debt reserve was used for the transfer. Shahinfar sits on the board. Applyrs was on the board as city auditor and remains there as mayor, though she sent a deputy to the meeting where the transfer was approved.
The city’s budget director, Gideon Grande, who sat on the board, also quietly departed the administration sometime before the extent of the budget crisis became public. The Times Union’s efforts to reach him have been unsuccessful.
What is the city doing to fix the problem?
Applyrs announced an across-the-board hiring freeze for all non-essential city positions on March 20. That was coupled with belt-tightening measures across all city departments that will impact everything from travel to the purchase of office supplies.
Article continues below this ad
All city departments have now submitted plans about how they would cut their budgets by 7%, 10% and 15%. How those changes will be implemented in actual budgets for 2027 remains unclear.
For the first time, the city has hired a lobbying firm to secure additional funds from the state as it continues to work toward a budget.
At the April 15 budget meeting, Administrative Services Commissioner Miriam Dixon, who, along with Ellis, has been spearheading the city’s response to the crisis, raised the possibility of some staff reductions for the first time. She said she asked the Department of General Services for “bottom-line numbers” for how many seasonal workers they would need for the summer.
Article continues below this ad
Larger cuts to the city workforce have not been discussed publicly. Applyrs has cited the city’s ability to navigate the coronavirus pandemic without layoffs as proof of its ability to weather the current storm without having to fire anyone.