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March 31, 2013


This is Dominick Calsolaro's Fiscal White Paper on the financial condition of the City of Albany that he issued in 2008. The other day I asked him if he had any comment to add to this paper in 2013, and he replied, "Only that the City (Mayor Jennings) continues on the path to fiscal calamity by continuing to borrow too much, ask for spin-ups of future State aid, and he has taken NO steps to streamline City government and its operating budget."

Albany's Fiscal Problems

The City of Albany faces numerous fiscal challenges in the coming years.

The major problems are:

1. The inability of the present administration to control operating expenses. In the past ten years, Albany's operating budget has grown from $97M to $161.9M, an increase of over 60% - well above the rate of inflation over that ten year period.

2. The over-reliance by the administration on income from the operation of the landfill. This over-reliance has led to the landfill being maxed-out between three and six years sooner than projected when the last expansion was approved by DEC. By maxing-out the capacity of the landfill, the City is being forced to apply for a fourth expansion that if granted, will cost tens of millions of dollars in borrowed funds.

3. The over-reliance on State aid to pay for operating expenses of the City. In addition to the $16M in Aid to Localities in 2008, the City received an additional $22.5M in 19-A money (convention center) from the State. Yet, even with this almost $40M in State aid in 2008, the Mayor still managed to run an $8M deficit. In addition to this $40M in State aid, the Mayor attempted to get a PILOT from the State for the Harriman campus worth $11M a year. The Governor vetoed this proposal, thus leaving Albany with a possible deficit of $18M to $20M in 2009.

4. The Mayor's reliance on borrowing for everything from mobile radios to landfill expansion costs, has led to the City's long term debt increasing over 253% in the last ten years - from $50.9M in 1998 to $128.9M in 2008. That is an increase in debt of over 25% a year over ten years! This equates to a debt burden of almost $1400 per person. And, it must be noted, this increased debt burden occurred when the economy was running smoothly and the State was giving the City additional funds.

5. The enormous debt the Mayor has saddled the citizens of Albany with has resulted in a debt service payment in 2008 of $16.3M. This is an increase of $7M from the 1998 budget or an 80% increase in annual cost over the past ten years. This $16M is equal to the amount of Aid to Localities funds the City received in 2008 - thus virtually all of that State aid was used just to make the debt service payment - leaving ZERO dollars for programs and services.

The Mayor's lack of fiscal restraint and foresight has led the City of Albany into a financial HOLE that will take years to recover from. The City needs to implement a 5% rule when establishing its Capital Expenditure budget in the foreseeable future. The 5% works like this: the proposed borrowing for the next fiscal year must be at least 5% less than the current year's amount. And to continue this decrease in 5% must continue for at least ten years until the City's debt service payment fall below $10M annually. The City must negotiate employee contracts that closely mirror the economic realities we face today - we can no longer provide free health care to police officers and firefighters. The City must remove vacant positions from the budget and stick to a hard hiring freeze until the deficit is eliminated. Until these and other measures are undertaken, the City will continue to dig itself a financial hole that we will never be able to climb out of.

Submitted by Dominick Calsolaro September 30, 2008