City Manager Robert W. Healy presented his 32nd and final city budget Monday. (File photo: Rachel Offerdahl)

City Manager Robert W. Healy presented his 32nd and final city budget Monday. (File photo: Rachel Offerdahl)

The proposed $507 million city budget for next fiscal year is an increase of $18.6 million, or 3.8 percent, over the current fiscal year, City Manager Robert W. Healy told the City Council on Monday. (Click here to download a searchable 622-page PDF of the budget book.)

It brings roughly similar increases in the education budget (4 percent, to $151 million), sewer rate (4.2 percent, but with zero increase in water rates for the third consecutive year) and projected property tax levy (4.3 percent).

That increase in property taxes – $13.7 million more than the current year – is “considerably less than what was in our projections when we submitted to the rating agencies and what was indicated in our five-year projections,” Healy said, referring to the expected 5.6 percent hike foreseen just four months ago.

As with this year, the city will use $9 million from free cash, as well as any local aid over what’s expected, to lower what property owners are taxed, Healy said. The use of $2 million in “overlay surplus balances” from past fiscal years will also help, as it did this year.

Cambridge’s residential property owners famously pay the lowest tax rate in the state, and Healy said Monday that “the sort of services citizens pay for have literally been held to a minimum.”

“Clearly I’m proud and certainly excited to submit to the City Council a budget for fiscal year ’14 that represents only a 3.81 percent increase,” Healy said – especially because “this is my 32nd and final budget.” Healy is retiring June 30, with Deputy Manager Richard C. Rossi replacing him as of July 1 – the first day of fiscal year 2014.

The process

Through May 16, the council holds a series of televised public hearings to solicit citizen participation on departmental budget requests, which the council can shrink on its own but can only increase city manager consent. The Finance Committee hearings, led by committee head councillor Marjorie Decker, so far are scheduled for 9 a.m. April 30; 9 a.m. and 4 p.m. May 9; and 9 a.m. May 16. The council is projected to adopt the budget May 20.

It must adopt the budget by June 5.

The actual, implemented tax levy isn’t set until the fall, and money coming from the state – money from state and federal governments make up 7.9 percent of city revenues, significantly behind fees (14.2 percent) and taxes (71.6 percent) – could affect it. The budget book says explicitly budgeting caution was necessary because of uncertainties resulting from state aid budget reductions and possible federal sequestration budget reductions.

The budget anticipates $29.5 million from the state, or 5.8 percent of the total operating budget, compared with the $27.7 million that made up 5.7 percent of the current budget. And when it came to the state Chapter 70 money for education, the budget uses the same figure granted by the state this year.

“The governor’s budget shows a very significant increase … but [it] is dependent on the adoption of his tax package, and I will not predict what will happen to that tax package,” Healy said. “We use the same numbers for Chapter 70 as we used last year. If there is additional money available, the City Council will certainly have the opportunity for allocations.”

Some additional budget items:

bullet-gray-smallThe school district’s $151 million remains the largest line item in how the city spends its money, at about 30 percent of the $507 million. It is followed by public safety at $113 million (22 percent); and community maintenance and development at $105 million (21 percent), with all other areas taking 11 percent or less.

bullet-gray-smallThe proposed capital budget is $92.7 million, up $54 million, including continuing sewer and stormwater projects in the Alewife, Agassiz and Harvard Square areas ($54.7 million); Cambridge Common improvements ($2.2 million); street and sidewalks ($1 million); and Kendall Square surface improvements ($500,000). In February the city sold $65.3 million in bonds to pay for capital projects such as school renovations ($33 million), sewer reconstruction ($21.4 million), renovations at the former police station ($4 million) and improvements to the Harvard Square tunnel ($1.5 million) and Danehy Park soccer field ($1.5 million), as well as acquisition of fire rescue vehicles ($1.2 million) and $2.5 million in various other renovations and improvements.

bullet-gray-smallThe city’s non-union workers (and some union workers) are budgeted to get a 2.5 percent cost of living adjustment in their wages, including a 5 percent increase in health insurance and a 5.85 percent increase related to pensions.

“This is good news, this is really good news,” Healy said in presenting his final budget. “If you look at it now, this budget is in a very good place … this is a document that addresses the fiscal needs of the city for 2014 very well.”

“The city is in very sound fiscal condition and will continue to be for many years to come as a result of the policies the administration has recommended to you and you have adopted,” Healy said.