Property tax payers in Peekskill will get a break in City Manager Matt Alexander’s proposed 2026 city budget, but still will be paying more than the state tax cap amount.
Following the 3.5 percent tax increase in 2025, which came to approximately $100.5 per household, Alexander’s 2026 proposal is a 2.98% increase, or $87 per household. The proposal is also above the state tax cap of 2% and will require five aye votes from the Common Council for passage.
In his 2024 budget, Alexander sought a 3.5% increase and projected “… successive years of higher percentage tax increases ranging from 3.5% over a period of four or five years.”
The 2026 budget would total $57.35 million, an increase of $1.08 million over last year’s total of $56.27 million. Sales taxes are projected at $7.5 million and real estate transfer taxes at $990,650.
Both the sewer and the water funds, which are financed by a separate tax, are budgeted for 3% increases.
The Common Council is conducting a series of hearings on each department’s budget. The final budget must be voted on by Dec. 1 or the city manager’s proposed budget is adopted by default.
Upcoming budget presentations include the Planning Department on Oct. 14 at 6 p.m., and Water & Sewer Department and Department of Public Works on Oct. 15 at 6 p.m.
2026 tentative budget projects $1 million overall revenue increase
The overall revenue increase on the 2026 tentative budget is projected at $1,077,962.
Those revenues are reflected in over $700,000 in taxes; about $235,700 in payment in lieu of parking (PILOT) funds with an addition of a pilot program at 645 Main Street; about $316,000 due to in rem process for the period of 2016 to 2023; and employee health contributions at $71,075.
Alexander is projecting tax revenue from cannabis sales of $205,000 in 2026. His 2025 budget projected revenue of $575,000 but the city now expects that total to be $185,000. Comptroller Toni Tracy previously attributed this shortage to the city’s lack of experience with dispensaries and fewer dispensaries selling cannabis than expected.
The proposed budget includes a major increase in revenue from interest and penalties on real property owed for delinquent taxes. Alexander projects the city will collect $975,000 in 2026 compared to $280,220 expected this year and $270,479 in 2024.
Legal services, new hires, and overtime
The cost of legal services shifted in 2025 when the city replaced the in-house corporation counsel position with an outside law firm to handle its legal matters.
The 2026 budget projects outside counsel legal services of $665,000 and $65,000 for a city staff paralegal. In 2025 the city now expects it will spend $630,420 on outside counsel and $49,206 for the paralegal. In 2024 Peekskill spent $173,230 for city employed legal staff and $189,770 for outside counsel.
Peekskill Chief of Police Leo Dylewski said at a work session on Oct. 8 the police department’s request for the budget is to fill six vacant positions out of 62 total employees and possibly come back mid-2026 to see if it can create an additional officer position.
Police overtime in 2026 is projected at $670,000 in the proposed budget, attributed by the chief to the staffing issues. The city expects to spend $905,086 in overtime pay in 2025. In 2024, overtime for police totaled $1.36 million.
The 2026 budget includes funding for 11 citywide hires – six new positions and five replacements – including police officers, a firefighter, a skilled laborer, and a cook. It also accounts for $426,631 in cost-of-living adjustments and $260,468 in step and promotional increases for city employees.
The Peekskill Youth Bureau is also requesting a full-time senior office assistant and youth appointment worker. Executive Director Tuesday Mcdonald said on Oct. 8 that she recently learned they will be sharing a part-time senior office assistant with the Nutrition Department.
The city will repay $4.74 million in long-term debt principal in 2026. Long-term debt as a percentage of the total budget has declined from 71.27% in 2020 to an expected 48.0% in 2025.
Peekskill would have a full-time staff of 224, seven part-time staff year-round and 180 to 220 seasonal or temporary hires.
City accomplishments in 2025
“This year, our departments worked together to put together a winning budget for Peekskill, which shows that we can keep the city running with better and better results each year,” Alexander said at a budget session on Sept. 29. “But also while pursuing and moving projects further along. This job is challenging and rewarding because of that challenge.”
Among accomplishments in 2025 cited by Alexander a four-person walking patrol downtown to enhance public safety; code enforcement to reduce litter and improve neighborhood conditions; a new fire inspector to address overcrowding in rental units; two additional Parks Department laborers to maintain a growing park system, and additional equipment to provide better leaf pickup, asphalt restoration (fewer potholes) and sanitation services.
The Fire Department added six FEMA-funded hires, reduced overtime and expanded its inspection program. Due to grant funding gaps, programs in the Youth Bureau would be adjusted.
The city is exploring a self-insurance health plan with other Westchester municipalities that could save $1 to $2 million annually for the city and save $1.1 million of out-of-pocket costs for employees, according to Alexander.
Peekskill has received an Aa3 rating from Moody’s and received a designation from the New York state Comptroller’s office indicating the city’s rating as having the lowest negative attributes. The unassigned fund balance would total $4 million with an additional $500,000 emergency fund and a $550,000 contingency reserve.
“Peekskill must continue to reduce costs, attract new sources of revenue, and support both existing and emerging businesses to expand our tax base and ease resident financial burden,” Alexander concluded in his 2026 budget proposal. “Our ability to deliver high-quality services, invest in infrastructure, and promote inclusive growth depends on maintaining fiscal discipline while embracing innovation and opportunity.”
The full 2026 city manager’s tentative budget can be viewed here.
