Funding cuts, layoffs and other actions by the Trump administration could affect not only services but the Cambridge economy, city manager Yi-An Huang told officials Monday in the first detailed report on the impact of White House initiatives. Huang compared the level of fear and uncertainty to the beginning of the Covid pandemic “when so much was unknown and the full scale and impact of Covid was not yet fully grasped.”
Right now the city isn’t close to the “epicenter” of the impact, since it doesn’t house many federal employees who are losing their jobs, but decisions such as the order to sharply reduce National Institute of Health funding for scientific research will affect the city’s economy, Huang told city councillors.
“Anecdotally, I’ve heard university departments, particularly in biomedical fields, dependent on NIH funding, reducing graduate student admissions by anywhere from 20 to 50 percent,” he said.
Councillor Patricia Nolan said that layoffs at universities or Kendall Square businesses may affect workers directly, “but it also means for every single small business in Cambridge 30 percent fewer people coming in, spending for lunch, staying for entertainment or having the wherewithal to benefit from the things that we offer in the city.”
“I think, Councillor Nolan, you’re hitting the nail on the head,” Huang responded.
“We’re a little bit further from [the most direct impacts] at this point, which is why we haven’t quite felt it yet. But I completely agree that there’s the broader local economic impact that will happen,” Hang said.
There may be direct impacts in Cambridge “right now,” councillor Sumbul Siddiqui suggested, among students who can’t access affordable federal loan repayment options and city employees “who are also enrolled in various programs.”
A worst-case scenario
Councillor Ayesha Wilson asked Huang to present “the worst-case scenario” and Huang described a grim picture: “Probably that we’re seeing really substantial cuts in federal funding that are going to be far beyond what the city or the state can support … cuts in things like research and innovation funding, which is really the underlying driver behind our local economy, particularly in Cambridge, but also in Boston and in the state.”
“There is a level of regular funding from Housing and Urban Development, from Department of Education, from the EPA, from Fema, that keeps a lot of these really important programs running, and it’s something that we do kind of take for granted,” Huang said. “And if we end up seeing those programs shuttered, if renewals don’t happen because the staff aren’t there, then I think we will see really significant services end up being cut as well.”
Cambridge gets about $23 million in recurring federal grants that pay for services such as providing housing and services for households transitioning from homelessness, distributing small-business grants and supporting home improvement projects for lower-income residents, Huang said.
So far the grants have not been affected, but as “major staffing reductions at federal agencies go forward” and the administration acts “to slow or stop basic processes, there are real risks to ensuring that the annual grant agreements are renewed” for the 2026 fiscal year, Huang said. “What happens if there is no one on the other side to work out the details of the next grant agreement?”
Impact on health care
The cuts and executive orders could affect nonprofit organizations that depend on federal grants and the Cambridge Housing Authority, which temporarily lost access to rent voucher funds on Jan. 28 and faces other challenges from Congress and the new administration. Medicaid cuts could affect the Cambridge Health Alliance, Huang said.
He continued: “The health care sector in Massachusetts, we’re not doing great, and you could really see the economics of hospitals essentially be existentially threatened if there are significant cuts in Medicaid rates.” The rates are being discussed in this next budget cycle in Congress, Huang said.
The timing is striking: The Alliance’s financial situation has improved in the past two months, trustees were told at a finance committee meeting Feb. 25.
When asked about possible effects from Trump policies, spokesperson David Cecere has said only that CHA is studying it,
Vice mayor Marc McGovern recommended that the city hold neighborhood meetings to “talk to people and help them to really follow and understand what we’re facing. Because, you know, when those cuts inevitably happen, people are going to then start to turn to us and say, ‘You’ve got to make up this money, right?’”
“In previous years we’ve been able to pretty much say, ‘Yeah, we can do that,’ in most cases. We’re not going to be able to say that certainly as often,” he said. Even without the federal cuts, the city expects to be operating under budgetary constraints in the next fiscal year.
Hard choices ahead
Huang said choosing where to help will be difficult. “The reality is, the scale of federal funding will be impossible for Cambridge, or even really the commonwealth of Massachusetts to backfill. Of great concern is that we are already facing a drawdown of federal dollars as Arpa programs expire, and so we are potentially facing a second federal funding cliff,” he said, referring to federal Covid recovery monies known as the American Rescue Plan Act.
The city will have to “prioritize” to ensure that it’s carrying out essential services “that only we can do,” such as “plowing the streets and maintaining the parks and running after-schools that no one else will do,” Huang said. At the same time, “there’s ways that we ultimately will want to stretch and jump in and ensure that some important service doesn’t disappear.” One example was the city’s decision to fund a homeless shelter at the Salvation Army when the state ended its support, he said.
Councillor Catherine Zusy said she hopes the city adopts a “lean budget” for the next fiscal year starting July 1. “When financial times look shaky, I spend less, and I want to have more cash reserves. So I’m hoping that we’ll be spending less going forward and as we plan for this coming year, because we don’t know what we’re going to be hit with,” Zusy said.
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