City finances need attention
One topic that has not received much attention this election cycle is the city’s finances – one of the city’s strengths and one that should not be overlooked or taken for granted.
Cambridge has long benefited from robust commercial and industrial development that has allowed us to keep our residential tax rate low to fuel growth and add services for residents. Compared with other municipalities, Cambridge is in a very strong fiscal position, with about $190 million in free cash and a AAA bond rating that makes us the envy of many other communities. But we cannot be complacent.
Cambridge is not immune from broader economic trends. The pandemic altered the way office space is being used and vacancy rates are creeping up, layoffs have occurred in the life-sciences biopharma industry, and interest rates are higher and might remain so for a couple of years, dampening development. It is essential that the City Council understands and anticipates how these factors may affect our businesses and development. A softening of the commercial and industrial tax base will have material budgetary impacts.
In his most recent tax letter, the city manager cautioned the council that “it will be increasingly important to recognize the relationship between the annual budget and the associated impact on property tax bills, particularly regarding goal setting, prioritization and the appropriate level of budget growth.”
Cambridge needs financial expertise and problem-solvers on the council now to meet these challenges. With 13 years of municipal finance experience at Standard & Poor’s and another 20 years in planning, I know how important it is for Cambridge to maintain its strong financial position if it is to keep its AAA rating. It is up to the council to be cognizant of the economic environment as we set our spending priorities and to apply some basic financial discipline to our decision-making if we want to remain fiscally strong and stable.
It is vital that the council address financial questions explicitly in any policy or program discussion, evaluating direct project costs and broader financial impacts on the operating budget. From my observation, it is rare that these questions are asked. The council should require staff to do an upfront assessment of the impact of our policies and programs on the budget and our taxes. None of this should be an afterthought.
If elected, I will apply my skills to ensure the council has clear goals set for its policies and programs, have staff develop performance indicators to ensure we are meeting those goals and evaluate the financial impact of policies and programs before they are adopted or implemented.
The city needs a council that is focused on how spending impacts our budget and tax rate. We need to elect a council that is staying aware of the economic environment and adopting basic fiscal tools as part of our standard operating procedures, which will go a long way to maintaining our strong financial position. I look forward to bringing my financial acumen to the council if elected.
Joan Pickett, candidate for Cambridge City Council
This is welcomed acknowledgment in a city where “ priorities “ can be a dirty word. The city budget rose over 9 percent and the teachers union is threatening a strike. With a recession looming it inevitably means residential tax increases and some tougher decisions ahead. Its not sexy but its reality.
Terrific piece. Thank you Joan.
This what the City Council needs!
Anthony D. Galluccio, I’m sorry but ‘recession looming’ is a lie that the Republican party has been claiming for the past 3 years based on their fear of President Biden. The Economy is strong, there are plenty of job increase and unemployment is well under control.
There are ripples among the hedge funds and other speculators claiming this based on a shift of money into Bonds over the risky end of the stock market because that’s where they make their profits.
The only threats to the economy and recession are from speculation, hedge fund manipulation of markets and Republicans threatening to shut down the IRS or the Stock Market or to force thru child labor law repeals and attack the growing strength of Unions with actions in violation of Labor Laws (aka Starbucks,etc.)
@Cambridgejoe. +1. Have you noticed that Republicans only care about the budget when they are out of power?
Readers beware! Yes, city finances need attention. But please note that the NIMBY group that supports Joan (the CCC) plays a major role in dampening development. Joan of course sued to have bike lanes removed, costing us taxpayers. More housing leads to more money for the city and its shops. I believe Joan’s vision will lead to a city with increasingly unaffordable rents, dominated by aging homeowners in mansions, which spells doom loop for our schools and retail. If you care for city finances I suggest looking elsewhere.
Amazing that you sued the city to destroy existing infrastructure and want to talk about financial acumen.
Great piece Joan and a welcomed topic I’ve not heard other councilors address, with the exception of incumbents Toner and Simmons.
A recession is looming for Q2 2024 this not a “Republican conspiracy” but we already see signs of it looming. Debt is more expensive than it has been in 23 years making home ownership impossible. Construction has come to a screeching halt. Commercial taxes are flat. No one is able to build in this environment and that will have a ripple effect once the dust settles. People think Cambridge is impervious to the market but that is just hubris. Even unemployment is starting to rise from historic lows. The current council and manager are the most spend crazy group this city has ever known. We need a steadier hand on the til. Best of luck Joan!
Bankruptcies are usually a good indicator.
https://www.reuters.com/legal/bankruptcy-filings-surge-first-half-2023-us-epiq-2023-07-03/#:~:text=July%203%20(Reuters)%20%2D%20U.S.,filing%20data%2C%20said%20on%20Monday.
Thanks Joan – important topic – as is known for those who follow the Council and Finance Committee closely. The questions of what to expect in future assessments is something I have asked. ANd the overall fiscal health and the need for a comprehensive planning approach is something I have talked about often. The issue of how to plan thoughtfully for the future is exactly what I have advocated for at recent Finance Committee meetings. I asked specifically about the possibility of revenues declining due to commercial real estate values. My background in finance is strong – and why I have often raised the question of fiscal responsibility. I hope you heard me talk about it – surprised that you and Patrick Barrett didn’t mention my leadership on those discussion topics. .
Cut city services and infrastructure rather than increasing revenue to rates even somewhat comparable to other cities in this state.
That, of course, would interfere with our long & cherished history of using our zoning code to inflate property values and then claim necessity of under taxation and subsidy for residential real estate.
A vote for Joan and other CCC candidates is a vote for a failed status quo that has left us with vacant lots, vacant businesses, and sky high rents. All of these phenomena had been happening long before the bike lanes. Long before.