At a glance
The Common Council received Mayor Kamal Johnson's proposed 2026 budget, which projects a $385,000 draw from the fund balance to close a structural gap. The budget anticipates modest growth in property taxes (4%) and sales tax, but lodging and cannabis taxes have underperformed projections. The proposed spending totals around $16 million, with major cost pressures from personnel, debt service on capital projects ($700,000 for DRRI and the firehouse), and rising state-mandated retirement contributions (up 80% since 2020). Several councilmembers expressed alarm at the shrinking fund balance, now projected to fall below the state's recommended two-month minimum, and called for returning the budget to departments for further cuts. A public hearing is set for November 19 at 5 PM.
Mayor Johnson presents the 2026 budget
Mayor Johnson outlined the proposed $16 million budget, emphasizing responsible fiscal management and long-term sustainability despite revenue shortfalls and rising costs.
Key points
- Real property tax revenue is projected to increase 4%; sales tax expected to rise modestly.
- Lodging taxes and cannabis taxes both came in far below prior expectations; projections for 2026 are adjusted downward.
- Personnel costs remain the largest budget category; the city plans selective hiring freezes and reopened union talks.
- Debt service in 2026 will total over $700,000 for bond anticipation notes (DRRI and firehouse projects). 2026 is expected to be the final year of short-term borrowing for these projects.
- Mandatory state retirement contributions have increased $650,000 since 2020, an 80% jump.
- The mayor described the budget as balanced by strategic staffing adjustments, overtime caps (7% of payroll), and winding down temporary debt.
Mayor Johnson stated that 2026 is expected to end temporary financing for the DRRI and firehouse projects. Since the projects began, the city has spent over $2 million in short-term financing costs, exacerbated by COVID-related delays.
Fund balance concerns and the $385,000 deficit
Councilmember Margaret Morris and other members raised serious concerns about the proposed $385,000 draw from the fund balance, which would bring the city below the state's recommended two-month minimum.
Key points
- The fund balance has declined from $3.9 million in 2023 to $2.6 million in 2024. With the proposed $385,000 draw, the city will fall below the state's two-month minimum guideline.
- Morris emphasized that this is a structural problem: the budget does not pay for itself.
- The cemetery costs the city about $400,000 annually in transfers, roughly equal to the fund balance draw.
- Morris called for the budget to go back to departments for an additional 10% reduction, arguing department heads are best positioned to identify cuts without undermining essential services.
- Treasurer Heather Campbell noted it is unclear whether 2025 will also require a fund balance draw; some revenue projections missed their targets, but a hiring freeze and higher-than-expected sales tax in Q3 may offset losses.
Campbell said it is hard to forecast the final 2025 fund balance until the year closes. Some revenue categories underperformed, but cost savings from the hiring freeze and strong Q3 sales tax may mitigate losses.
Morris noted the cemetery requires a $400,000 annual subsidy, nearly equal to the proposed fund balance draw. She urged exploring a more sustainable model for cemetery maintenance.
Revenue shortfalls: lodging tax and cannabis tax
A councilmember asked about the gap between projected and actual revenue for lodging and cannabis taxes in 2025, and how those figures informed the 2026 budget.
Key points
- In 2025, lodging tax was projected to bring in $750,000 but only collected around $400,000.
- Cannabis tax was projected at $235,000 but only brought in approximately $60,000.
- The 2026 budget projections for both taxes are substantially lower, based on year-to-date trends extrapolated forward.
- For lodging tax, the 2026 forecast assumes some growth due to the opening of the Pocketbook hotel (already open) and possibly the 400 Warren Street hotel.
Questions on police contracts and street maintenance funding
A councilmember asked about sharp increases in line items for electrician services, police contracts, and street maintenance chips.
Key points
- Electrician services (line 3020) rose from $3,500 in prior years to $38,000 in the proposed budget. Campbell suggested this was likely a one-time equipment purchase but deferred to the department for specifics.
- Police contracts rose from $52,000 to $92,000. Campbell recommended the councilmember ask the police department directly for details.
- Street maintenance (chips) increased from $69,000 to $923,000. Campbell explained this line includes offsetting state revenues: chips, state touring, pothole repair, and extreme weather recovery funds. These are revenue-neutral and do not affect the tax levy.
- DPW Superintendent Rob Perry typically schedules major capital projects every other year to let state funds accumulate. He is holding state touring funds to cover potential overages on the Ferry Street Bridge project.
Campbell clarified that state touring, chips, and similar programs appear as both revenue and expense. They do not impact the tax levy or the deficit.
Youth department and senior center staffing
Mayor Johnson responded to a comparison between staffing levels at the youth department and the senior center.
Key points
- The youth department has six full-time employees: a director, a full-time secretary, a cleaner, and two full-time ward attendants.
- The senior center has one full-time employee.
- Mayor Johnson explained the programs serve different populations and require different levels of staffing.
Rescue squad allocation
A councilmember asked about the city's allocation for rescue squad services.
Key points
- The city does not have a line item in the budget for rescue squad services.
- The $75,000 cost for EMS services is a county chargeback, billed separately, and does not appear in the city budget.
Police and cemetery costs, library funding
A councilmember expressed concern about the police department budget, cemetery costs, and library funding, and asked about possible consolidation with Greenport.
Key points
- The councilmember noted the police department and cemetery represent large fixed costs.
- The library receives $400,000 annually and does not pay rent to the city.
- The member asked whether consolidating police services with Greenport is feasible.
- No formal answer was given on police consolidation.
Library hours and services
A councilmember advocated for the library to restore hours and computer access to pre-COVID levels.
Key points
- The library's funding has increased from $120,000 in 2017 to $400,000 in the current budget.
- The member said the library has not returned to pre-COVID service levels, including hours and computer access.
- The member urged the council to ask the library to restore services in exchange for the increased funding.
Tax collection update and foreclosure timeline
Treasurer Campbell provided an update on back tax collections and the city's foreclosure process.
Key points
- The city has collected $890,000 in back taxes to date. The delinquent property list has shrunk from 151 properties to 76.
- The outstanding balance is still about $2 million. Four properties account for half of that ($1 million).
- The city charges 1% interest per month on delinquent taxes, as required by state law.
- A second demand letter will be sent after a public hearing on the installment agreement (scheduled for November 12). The letter will include information on two payment plan options and a brochure from Housing Resources offering free foreclosure counseling.
- After the second demand period, the city will begin legal foreclosure proceedings: publishing the list with the county clerk, ordering title searches (the cost is added to the property), and following state notice requirements.
- A 2023 federal court ruling now requires municipalities to return any surplus proceeds from tax foreclosure sales to the property owner, after taxes and directly applicable expenses are paid. There is no clear guidance on whether administrative costs (such as staff time) can be recovered.
Four properties account for $1 million of the $2 million in delinquent taxes. These are not currently on installment plans.
A 2023 federal court ruling now requires municipalities to return surplus proceeds from tax foreclosure sales to the former owner. The city can only recover taxes, water, sewer, and directly applicable expenses like title searches. There is no clear guidance on recovering administrative costs.
Public comment: balanced budget and cemetery funding
Two residents spoke, one urging the council to find a balanced budget and the other asking about federal funding for the cemetery.
Key points
- A resident encouraged the council to find a balanced budget rather than starting the year with a deficit, suggesting cuts or revenue-sharing agreements with Greenport.
- Another resident asked whether the cemetery receives federal funding because soldiers are buried there. Campbell said it was a good question to research; federal support typically requires a certain threshold of federal burials.
- The cemetery director will make a presentation later in the evening.
BEA process and call for departmental cuts
Councilmembers praised the Budget and Finance Advisory committee's work but reiterated the need for deeper cuts at the department level.
Key points
- Councilmember Morris thanked Treasurer Campbell and the BEA for extensive work on the budget. She said the BEA met frequently and made substantial cuts to bring department requests from around $19 million down to $16 million.
- Morris repeated her request for the budget to go back to departments for an additional 10% reduction. She said department heads are best positioned to identify where cuts can be made without undermining services.
- She also requested a detailed public presentation of the budget beyond the public hearing, so residents can understand how the budget was built and why taxes are rising 3.9%.
- A councilmember noted the 2020 budget was just under $16 million, and the proposed 2026 budget is roughly the same figure despite inflation and rising costs.
Morris and other members urged returning the budget to department heads to identify additional savings before the November 19 public hearing.
Budget received; public hearing set for November 19
The council voted to receive the mayor's budget message and the BEA's proposed budget. A public hearing was scheduled for November 19 at 5 PM.
Key points
- The council voted unanimously to receive the proposed budget.
- The public hearing is set for Wednesday, November 19, at 5 PM.
- President Morris asked Mayor Johnson whether a detailed budget presentation for residents would be scheduled beyond the public hearing. The mayor said it could be done.
The council will hold a public hearing on the proposed 2026 budget on Wednesday, November 19, at 5 PM.
About this page
FUTURE HUDSON is an experiment in civic engagement: every public meeting of the City of Hudson since January 2026, transcribed and made readable, so any resident can follow what the city is deciding without attending every meeting. This page covers one meeting; see the full archive.
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