Tax projects, raises, safety initiatives drive Albany’s $342 million budget

ALBANY – After more than five decades of operating its current pension plan, the city of Albany is looking to phase out of the defined-benefit plan. That is not something that happens overnight, and current employees will be unaffected, but it will mean a change for new employees.

The move will not impact this year’s budget, but in a few decades, the city will be shed of the long-term liability of the plan.

For this year, the biggest drivers of the city’s spending plan will be plans to move projects funded with the 1% special-purpose local-option sales tax (SPLOST) and transportation special-purpose local-option sales tax (T-SPLOST) forward at an accelerated rate.

Other budget initiatives for the fiscal year beginning July 1 will be a program to ensure that city employees are provided with all required safety gear and are using it properly, and a proposed 3% raise for employees.

The safety initiative has been ongoing since the death in December 2024 of a city employee when a sewer line collapsed.

“One of the main initiatives of the city manager is (the) safety officer, making sure we’re proactive and the safety of employees is primary, making sure we have all the safety equipment,” Albany CFO Michael Eaton said.

City Manager Terrell Jacobs also is emphasizing developing employees’ soft skills within their operational roles to make the city operate more efficiently.

The city’s overall budget is expected to increase from $318.79 million for the current fiscal year to $342.37 million.

“The majority of the increase, over $20 million, is due to assumptions of (using) sales tax for SPLOST and T-SPLOST projects,” Eaton said.

That does not mean a tax increase, but simply moving projects forward at a quicker pace than had been the case previously.

The 2025-2026 budget does not call for a property tax millage increase, the CFO said. The Albany City Commission is scheduled to adopt the budget on June 25.

All city employees hired after July 1 will be enrolled in the new defined-contribution plan, while employees hired through June 30 would be part of the pension plan.

The city will match up to 6% of employee contributions at 100%, and employees would have the option of contributing a larger amount that would not be matched. Employees will contribute a mandatory 3%.

In recent years, the city has been required to make payments into the defined-contribution plan, most recently $4 million in December 2024.

“The bottom line is we’re trying to address the liability by having an end date in mind,” Eaton said.

While the change will not have an immediate impact, it will be felt by future city commissioners, Commissioner Chad Warbington said.

“This is a long-term decision,” he said. “The current commission, we’re not going to see the benefit of it. In 10 to 20 years, that’s when citizens and elected officials are probably going to be looking back and saying ‘Thank you.’”

Through the first five to seven years, the city’s budget probably won’t reflect the change, but in about the eighth year, the difference will be noticeable, Warbington said.

While the change is good from a financial standpoint, it also reflects the reality that today’s workers are less likely to come aboard with the city and remain for 30 years or more, he said. They’re more likely to change jobs several times in a lifetime and will enjoy the flexibility of being able to take the money from a defined-contribution plan to the next job.

“I would say it’s two-fold,” he said. “One, pensions in general are very expensive and very expensive toward the future because they are underfunded. (With) the 401K-style defined-contribution plan, the city is putting the money in up-front. From the city’s side, it provides more long-term security.”

The commissioner said he wanted to emphasize that no current employees will be affected and that the pension plan will provide for them.

“If anything, we’re making the plan more stable and more secure,” he said.