Thursday, June 13, 2024

Municipal crews work near Central Square March 26. (Photo: Julia Levine)

A $955.6 million budget was approved Monday for Cambridge’s 2025 fiscal year. It’s an increase of $71.8 million over the current year’s adopted budget, or 8.1 percent more, but the series of votes that funds the business of the city as of July 1 this time calls for some follow-up.

Along with the three votes that underlie the budget as a whole – for the general, water and public investment funds – were a few loan orders approved without argument on the basis that public money was being unlocked but due for a second step: All are coming back to the council in the coming months, budget co-chair Patty Nolan said, as part of a new caution befitting the city’s moment of austerity.

“Many of these items will not necessarily go forward without vetting, without an understanding that we are at a new economic position,” Nolan said. “There’s a range of projects. We will not be able to do them all.”

The city has seen slower private-development permitting as part of a national trend even as it’s pursued long-wanted goals such as universal prekindergarten, construction of a $299 million building for two schools and a teacher contract that provides for a longer school day – and contains $268.3 million for the school district.

The submitted budget identifies $216 million of funding across areas including housing and homelessness, early childhood, sustainability, traffic safety and antiracism, equity and inclusion.

This budget creates sustainability and housing departments and looks to do deferred maintenance on languishing municipal structures. But some of the moves, which were announced in February, are largely restructuring. Some even make room for potential budget trims, such as the possibility of having a head of emergency management – never hired despite the city manager getting a green light to do so – being combined into a climate officer role. Yi-An Huang’s executive branch has moderated its allowed spending in other ways as well, such as downgrading a strategy officer role to part time.

Move to austerity

The public investment fund budget of $38.4 million was another example of the city’s move toward austerity, Nolan said.

“Some of these investments were put off over time to allow the city to really look at our spending. Initially, in our last year’s budget, it had been expected to be much, much higher” in the $90 million range, Nolan said. “Again, I know harder decisions are coming, but I just want to appreciate that we are already seeing the impact of some of the ways in which the current economic and macroeconomic trends are affecting the work that we can do.”

In addition to the decrease in municipal revenue, borrowing for big undertakings from the past decade is nudging Cambridge toward scraping its debt ceiling and cramping a wealthy city’s big swings.

“We’re in a very different, somewhat scary time in terms of looking ahead,” Nolan said. “We simply cannot sustain the kind of growth that we’re seeing in our operating budget this year. And the capital budget is going to have some hard choices to make in the fall.”

Finance co-chair Joan Pickett agreed that increases such as the coming year’s 8 percent are likely at an end. They “translate into tax increases for our residents and our businesses and becomes really hard for them to sustain over time,” Pickett said. “We don’t want to have a situation where our taxes are so high that people say, ‘Gee, is it really worth staying in the city.’”

“For us to really look at the taxes and the tax rate means we have to moderate our spending. That’s the challenge in front of the council,” Pickett said. “We do want to look at our capital projects differently, or a little bit more comprehensively.”

Free cash change

Over the past couple of years, the budget process has changed to explicitly include money from the city’s accumulated “free cash,” rather than leave it for appropriations throughout the year – even though the appropriations aren’t surprises. Whether injected to reduce property owner tax levies or as “pay-as-you-go” capital in the operating budget, staff said the new approach is more transparent.

There is “a significant increase in the overall amount of free cash that is being used in the submitted budget,” assistant city manager for fiscal affairs Claire Brewer Spinner explained during a May 5 hearing of the council’s Finance Committee. “Typically throughout the year, additional appropriations of free cash come to the City Council for many of these things that we have already placed in this budget.”

For example, the council would otherwise soon be approached for $2.9 million in free cash for a firetruck and $1.7 million for emergency communication radios – items that are now spelled out in the budget councillors vote on upfront, Spinner said.

This year the applied free cash amounts to $31 million, with most of it being used to lower the property tax levy and $13 million going to capital outlays.

The loan orders approved Monday – for discussions that could start as soon as August or September – included such things as $11.5 million for “complete streets” roadwork; $8.5 million for sewer reconstruction; $6.6 million for construction for water needs; and $3 million for open space.

Delay briefly considered

Concerns that the budget vote had been publicized poorly led to brief discussion of a week’s delay; the 45-day window for action on a submitted budget ends around June 13 for Cambridge, according to budget director Taha Jennings.

Councillor Ayesha Wilson took the tone of the room about waiting, “recognizing the lack of transparency around the vote for today,” but met disinterest from fellow councillors and the city manager.

“We’ve had this on the calendar since we began our Finance Committee hearings on the budget in the early winter,” Huang said. “Tonight may be a little late to say, ‘Here’s a new idea about how we would engage the community or have more transparency into the process.’ I’m always excited to think about that in terms of that overall process.”