By MAGGIE LANOUE
Contributing Writer
Albion’s 2026 budget review began Dec. 1 with a study session. Council members worked through an 80-page draft budget and raised questions about changing revenue patterns, rising infrastructure costs, and the strain of road and utility work across the city.
City Treasurer David Clark opened the study session with a review of the city’s major revenue streams. For Fiscal Year 2025, income tax is projected at roughly $1.6 million, surpassing property tax revenue of about $1.3 million. Property tax now represents a relatively small portion of total projected FY 2025 revenue. Clark noted that performance has been strong this year, but added, “We’ve done a lot, but we can’t keep rolling at that pace,” emphasizing the importance of grants and state-shared revenues in keeping the budget balanced.
Infrastructure dominated the discussion. Interim City Manager Doug Terry explained that ongoing water and sewer work continues to reveal aging pipes, unexpected conflicts with old infrastructure, and street conditions more complex than anticipated. “Every time we open up the ground, there’s something that we find,” he said, adding that known future repairs could exceed $1.2 million as the city works through long-standing utility issues. These realities have shaped which street projects can move forward in 2026, with staff focusing on streets that pose fewer underground risks while larger needs remain under evaluation.
Council members expressed concern about the rapidly changing financial picture for road and utility work. The Street Improvement Fund, in particular, may approach a critical point in the upcoming year if grant support slows. Several council members requested clearer explanations of large line-item categories before they vote on the final budget later in December.
The conversation turned to TIF and TIFA. TIF stands for Tax Increment Financing, a state-authorized tool that allows cities to capture the increase in property value within a designated district and use that captured value for improvements in that same area. TIFA refers to the Tax Increment Finance Authority, the entity that administers those funds. In Albion, the Economic Development Corporation (EDC) operates the TIF/TIFA fund and uses it to support improvements in the industrial park, commercial corridors, and infrastructure projects that qualify for economic-development purposes.
The use of TIFA dollars had been questioned in a recent letter to the editor, but the discussion at the study session provided clarity. With new EDC President and CEO Debbie Kelly and EDC Treasurer Bruce Nelson present, the council received a detailed explanation of how the funds have been used and why. Nelson noted that the EDC has invested heavily in preparing the industrial park for development, including work that helped secure more than $1 million in state funding. “There’s only one place right now until we develop these new revenue sources, and that is the TIF fund,” he said. Kelly added that this year represents a transition point as the EDC works to build new and more diverse income sources.
Mayor Pro Tem Andy French reflected on the delays the EDC faced last year while waiting nearly 12 months to hire new leadership. That gap limited planning and slowed several long-range initiatives. With new leadership in place, French expressed confidence that the coming years will show more stability and clearer reporting.
At the regular council meeting later that evening, members asked detailed questions about department-level increases in the FY 2026 draft. Councilmembers noted higher-than-usual costs for tree work, engineering, utility repairs, and street-related expenses. Interest earnings are expected to decline as the city spends down some of its fund balances to meet ongoing infrastructure obligations. Clark thanked his staff for the intensive work required to reconcile payroll, departmental requests, and project commitments.
A central point of discussion was where the city’s money comes from. The city provided estimated FY 2025 revenue figures. Approximately $1.6 million comes from income tax, about $1.3 million from property taxes, around $1 million from loan proceeds and other one-time transfers, and the remaining $7 million comes from a combination of state-shared revenues, grants, special funds, and other city-wide sources. While the underlying budget contains many separate funds with their own restrictions, this overall picture helps illustrate why property tax, by itself, is not the primary driver of Albion’s annual revenue.
One of the largest inflows this year was the sale of the former Maple Grove property, followed by the liquidation of an investment bond tied to that sale. That bond was cashed out in 2025 to help the city cover urgent infrastructure needs that emerged as road and utility crews began uncovering older systems. These one-time sources contributed to what Public Works Director Jason Kern earlier called the biggest year for infrastructure work in decades.
Albion’s long-term revenue picture is tied closely to population because several forms of state support, especially State Revenue Sharing, are calculated on a per-capita basis. The FY 2026 budget includes a standard line for “Revenues from State Sources,” which represents money the city receives through state formulas that account for population, taxable value, and other local characteristics. When population declines, a city’s share of these revenues tends to fall as well. According to recent Census estimates, Albion’s population continues to decline modestly. Because State Revenue Sharing remains one of the city’s larger recurring revenue streams, even small population shifts have meaningful budget impacts. Students who live on campus at Albion College are counted in the city’s population for census purposes, which helps maintain some of the city’s eligibility for state allocations, though most students do not contribute directly to income tax.
Another recent letter to the editor focused on Albion College’s financial condition. Although unrelated to the city budget itself, the topic generated attention because changes in college enrollment influence the population numbers used in state funding formulas. Albion College also remains one of the city’s most significant employers, and campus activity affects local business patterns and housing demand. These connections mean the college’s financial health and the city’s financial stability are intertwined.
For residents who follow opinions on these issues closely, it is now possible to access The Recorder, including letters to the editor, digitally. The Recorder began offering an online edition shortly after Wilcox Newspapers purchased the paper about two years ago. Digital access is available as an add-on to the print subscription or as a standalone option of about $20 per year—an option that many consider a meaningful gift during the holiday season.
Council is expected to revisit the full FY 2026 budget later in December. Additional public materials, including clearer summaries and the graphics requested by residents, may be added to the next meeting’s packet. Although the financial challenges remain significant—aging infrastructure, limited revenue growth, and unpredictable underground repairs—council members expressed cautious optimism that with continued grant success, stronger planning, and stable leadership, the city can move forward without sacrificing essential services.
