The city wants to establish a $5 million “stabilization fund” to respond to likely funding cuts by the Trump administration, officials said Wednesday. The fund would be a last-minute addition to the proposed budget for the fiscal year starting July 1 and would come from “free cash,” a reserve consisting of unappropriated money,
“We have been – as we’ve tracked the things that have been threatened – feeling like we do need to make some sort of a commitment that we will find resources to backfill the most critical programs, not necessarily knowing exactly which ones they are,” city manager Yi-An Huang said at a meeting of the City Council’s Finance Committee focused on big projects and capital spending in the city’s fiscal year 2026 budget.
Cambridge is the only city in the state “that has this ability to respond from a fiscal perspective. I don’t think any other city has an ability to find any sort of funding to backfill what could be coming out of federal funding cuts,” Huang said.
The city’s presentation to the committee suggested two candidates for help from the stabilization fund: about 130 formerly homeless individuals who have emergency federal rent vouchers enabling them to live in permanent supportive housing, and about 40 families that include immigrants who live in subsidized housing and are threatened with sharp rent increases and possibly eviction. Those federally funded supports “are some of the ones that we’re most worried about. We have the most concrete reason to think that over the next year, these may disappear,” Huang said.
The Department of Housing and Urban Development plans to terminate the emergency voucher program as early as Sept. 30 instead of 2035, as originally approved. The agency has also ordered the Cambridge Housing Authority to adopt a rent formula that could sharply increase rents for 42 “mixed families” with some immigrant members; they aren’t eligible for federal housing subsidies but have been allowed to live in public housing or use Section 8 vouchers because at least one family member is a U.S. citizen or has eligible immigration status.
Besides trying to price mixed families out of their housing, the Trump administration is taking steps to bar them entirely.
Those two initiatives alone could use up the whole stabilization fund, according to the presentation. Spending $3 million to keep the 58-bed Transition Wellness Center for homeless individuals in operation past June – a point of controversy between the city administration and a majority of councillors – was also presented, apparently to demonstrate that “there are higher impact needs related to housing and homelessness” besides the homeless shelter in the next fiscal year. City officials have continued to argue against keeping the shelter open, while some councillors are fighting to maintain it.
The city also could lose an additional $20 million in federal aid “in different areas that must be considered,” including fuel assistance for lower-income residents, other help for homeless individuals, and school programs such as summer and school-year lunch, reading help and special education, the presentation said.
Grim future for city finances
Huang and Claire Spinner, assistant city manager for fiscal affairs, forecast a grim future for city finances, one in which increases in spending and property taxes must adhere to strict limits. The city intends to keep annual increases in operating expenses below 5 percent and rises in the property tax levy below 9 percent during the next four fiscal years at least.
For decades, commercial development has reliably swelled the city’s tax base; commercial taxpayers now pay about two-thirds of the tax levy, Spinner said. But construction has slowed and lab and office vacancies have increased, officials started warning last year. Federal Covid aid such as the American Rescue Plan Act has ended.
If the commercial tax base continues to decline while the residential tax values remain the same or increase less, residential taxpayers could end up paying a greater share and some individual tax bills could spike, Spinner said. The city also risks coming closer to its property tax limit set by the 1980 Proposition 2½ law that restricts the total tax levy.
Not enough shelter
The situation has forced councillors into the unusual position of being unable to save worthy causes such as the Transition Wellness Center. “For so long we’ve been able to do all of it,” said vice mayor Marc McGovern, familiar with the issue of homelessness from his career as a social worker. “It’s just so difficult.”
McGovern and other councillors have continued to push for keeping the unusually well-resourced shelter open; it offers semiprivate rooms, medical services and other help that makes it similar to permanent supported housing for people coming out of homelessness. About 22 people remain in the shelter and only about five or so are likely to be placed in housing before it’s scheduled to close June 15, said Ellen Semonoff, assistant city manager for human services.
Making things worse is the fact that several shelters that operated during the winter are now closing, Semonoff said. “We have a major problem with there not being enough housing or shelters in this region,” she said.
Even if the city kept the Transition Wellness Center open “we would still have lots of people on the street,” Semonoff said. ”Unfortunately, our experience from a regional basis is we could fill any number of shelter beds. If we opened 300 more, they would get filled, and we would still have people who are not housed.”
Other options for funding
McGovern said he agreed, but he still wants the wellness center preserved. Other councillors advocated to replace the Rise Up income guarantee program, and other initiatives that are not in the budget planned by the city. Councillors have the authority to reduce or delete city appropriations but cannot add any.
Picking up on a suggestion in a public comment, some councillors said the city might reduce expenses by eliminating the $1 million participatory budgeting program or introducing a means test for families in the city’s prekindergarten program, which now offers free services. Some residents have even asked in public comment at council meetings why they can enroll their children free of charge when they have enough income to pay for early education themselves.
As for the programs that could be funded by the stabilization fund, housing authority executive director Michael Johnston had said previously that the authority would contest HUD’s order to change rent calculations for mixed families and had a “workaround” planned to protect the tenants if its objections weren’t successful. Johnston didn’t immediately respond to an email Thursday.
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Funny, we never hear the City Manager talk about CUTTING the budget. His future plans call for increasing the budget by ONLY 4% and increasing our property taxes by 9% for the next 4 years. That’s a 36% increase when seniors are struggling NOW to keep up with the past increases of the Huang administration. Where are Bob Healy, Rich Rossi, and Louie Depasquale when you really need responsible budgeting?