Tuesday, April 23, 2024

It’s not possible for the city to give direct financial aid to businesses such as ImprovBoston, which closed its Central Square comedy club due to coronavirus, city councillors are told. (Photo: Marc Levy)

After being told repeatedly of an “anti-aid amendment” that prevents the city from giving direct financial help to residents and businesses, on Monday city councillors demanded specifics.

“We have been asking the questions of the city solicitor and we get the same answer, which is that to give money directly to residents, to businesses and to organizations is a direct violation of the anti-aid amendment of the Massachusetts constitution,” vice mayor Alanna Mallon said to the city manager and solicitor at a meeting of the City Council. “That’s why the mayor, myself and others jump through a million hoops to utilize the funds that we could” despite the city having more than $230 million “in the bank” when the pandemic hit.

Neighboring Somerville applied $500,000 in free cash for summertime coronavirus relief in a way some Cambridge leaders would like to, Mallon said, raising a recently recurring theme among councillors: Why legal advice asked by councillors so often clashes with what they see being done around them by other municipal governments.

Such questions aren’t exactly new to the vice mayor; they date back to at least mid-2019, as the city manager and solicitor brushed off parking solutions applied in Somerville and Brookline wanted by councillors because of Inman Square construction.

In this case, councillors Dennis Carlone and E. Denise Simmons asked for a memo outlining legal restrictions on giving, which Mallon amended to elicit specific responses: any advisory from the state Department of Revenue about restrictions to giving out of free cash; and city staff’s “existing free cash policy.”

If there’s no existing city policy, staff are to ask the state for guidelines allowing “for more robust parameters on eligible expenses from free cash” to help residents, small businesses and nonprofits directly, the amended order says. Mallon’s amendment and the order passed unanimously.

Financial implications

Though the council order’s might have the effect of bypassing city solicitor Nancy Glowa’s interpretation of the law, Glowa had already given councillors an opinion Monday that the free cash spending they described wasn’t allowed; and City Manager Louis A. DePasquale and other city staff explained why it was a bad idea.

Councillor Quinton Zondervan had also suggested that city aid could be given to restaurants and small businesses in compensation for closing entirely for two weeks, so the city could quarantine and help suppress a wave of coronavirus infections.

“The city is in no position to let our businesses or our restaurants or anyone think we can solve this even if there is a legal [possibility],” DePasquale said, noting that two weeks could turn into three or more, and some closed businesses might never reopen. “It’s not just about aid.”

The city has distributed $13.3 million in aid and spent more than $60 million from free cash this year, mostly to address coronavirus issues, which was “having financial implications,” he said. “Shame on me if I haven’t expressed enough to the council that we are not in the financial position we have been in,” given the millions of dollars lost in areas such as the parking fund and the sewer fund – those two alone amounting to some $13 million in potential losses.

Motel and hotel room taxes are down as well, since room occupancy rates remain as low as 10 percent, and the meals tax is down by half, said David Kale, assistant city manager for fiscal affairs. He warned of large “question marks” around the effects on taxes, including property taxes.

“We have to recognize that there are going to be real financial implications here,” DePasquale said. “We are looking at major reductions.”

Called out?

One surprising moment in the conversation resulted from councillor Jivan Sobrinho-Wheeler’s prodding over constraints cited by city staff over its spending, such as in Glowa’s remark that city government has “tried to be as creative as we can within the legal constraints that we have … because of the anti-aid amendment and other restrictions.”

Following Carlone saying that Cambridge’s taxes were at 68 percent of its Proposition 2½ capability, as opposed to cities such as Somerville and Boston that tax at around 99 percent of their capability, Sobrinho-Wheeler argued that the revenue constraints being cited by city staff were self-imposed. In some cases when staff says the city cannot help, “it’s because we’re choosing not to raise the revenue,” Sobrinho-Wheeler said, referring to “a choice we want to make as a city and as a council.”

DePasquale had a strong response.

“That is a not a true statement. We cannot just give out property tax money based on non-state guidelines whether we raise it or not,” DePasquale said, calling the city’s low-tax approach a strategy arrived at with the City Council at least 20 years ago and not questioned until the current term. He also felt it was the wrong time to be talking about raising anyone’s taxes, especially among the city’s elderly; though the terms of taxation weren’t discussed, economists have made clear that wealthier U.S. residents have not suffered from the pandemic – and Cambridge has plenty of very wealthy residents.

But what was surprising was the even stronger response of councillor E. Denise Simmons, who called Sobrinho-Wheeler’s comments “woefully unfair.”

“I don’t appreciate hearing it, as someone who sat on the council 20 years ago and remembered how the taxpayers were screaming at the council about the tax rate, and this council then bent over backward to say we will work toward giving you some relief,” Simmons said. “I’m not going to be called out by name by someone who just got here five minutes ago.”

Sobrinho-Wheeler had not referred to anyone by name, and pointed that out.

“I’m also not casting any aspersions,” Sobrinho-Wheeler said. “It’s just a fact: We say there are revenue constraints, but we can be raising more revenue.”