The city of Albany is facing a $6 million budget shortfall in the next biennium, staff told the City Council on Monday.
During a work session with the city’s budget committee, the board learned about compression — the inability to collect taxes on properties that have already reached maximum capacity in their tax obligations.
City Manager Peter Troedsson said tax compression is expected to impact the city in the future, but more pressing was the funding gap expected as the city began building its budget.
The city must legally submit a balanced budget to the state, and Troedsson said that may mean cutting services or positions.
“(The shortfall) would require work force reductions,” he said.
During the last budget cycle, police and fire positions were on the chopping block, Maple Lawn preschool (which was funded in part by the city) was cut off and several other reductions were on the table.
Property taxes, Troedsson said, do not cover some basic city functions such as emergency services. The city has received a financial jolt from federal CARES Act funds related to COVID-19, but those are one-time funds.
For a more long-term solution, staff received approval from the City Council to begin building the infrastructure for a utility tax. The council would have to approve that tax before it was implemented, or the board could forward that question to the electorate.
The first set of budget meetings are expected this spring, with the final budget due this summer. During Monday’s meeting, Troedsson said additional cuts could be proposed.
“Additional cuts could be necessary,” he said, noting that the city has already forgone filling positions left vacant by retirements or resignations and is working on prioritizing and innovating services.
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