On the TV show, Benson, is the story based in Albany, New York?

Answer 1

Although the state in which Benson takes place is never specified, there are multiple clues to its location:

Dialogue in the show specifically eliminated New Mexico, Arizona, Oregon and Colorado and Connecticut as possible locations.
Benson has a map of Western Connecticut, Eastern New York, Long Island and Long Island Sound on his office's wall. He also has a map of the Chesapeake Bay area. This may indicate that it takes place in the Northeastern United States, although should not be taken as conclusive.
In the episode Old School Ties, it is mentioned that the "other side of the state" is 300 miles away from the capital. This disqualifies all of the states in the Northeast with the exception of New York and Pennsylvania.
Benson is a spin-off from Soap, a television show which took place in Connecticut. At no point is it suggested that Benson takes place in the same state as Soap, however.
In the episode All Shook Up, a major earthquake rocks the state capital. While it's possible for the Northeastern United States to be rattled by an earthquake, the jolt depicted in the episode is more common in California or the Pacific Northwest.

Answer 2

No, his boss is the governor of Maryland, i believe.