In liberal city, a cash conservatism
Cautious tack avoids layoffs
Cities and towns around the region are reducing municipal services and laying off employees in order to cope with budget shortfalls and cutbacks in state aid.
But Cambridge officials are confident they will be able to close the revenue gap that resulted from cuts in state aid this year and balance the budget while limiting service reductions and avoiding layoffs altogether.
"At this point in time, our first reaction is not layoffs, not to close libraries, not to change what people expect in the city," said Louis Depasquale, assistant city manager for fiscal affairs. "We're not balancing the budget on employee or service cutbacks."
The city's operating budget for the current fiscal year runs about $434 million, and the $2.6 million in recent state aid cuts can be compensated for because the city's revenues usually exceed budgeted expenditures at year end, Depasquale said. "$2.6 million is something that we manage to have [as excess revenue] every year."
But with the budget for the coming year expected to reach $440 million, the projection of dismal state revenue numbers, and the economy in the doldrums, the budget committee has also asked department heads to look carefully at expenses and to find savings.
"We wanted our department heads to understand that with this reduction in state aid, the world has changed a little," Depasquale said. "Right now, we're not talking layoffs, but we are talking about reductions. . . . These departments may have to do what they're doing with a little less, and the room for expansion is really not there at all."
Such reductions include replacing fewer vehicles and examining every vacant staff position - there are currently 65 across all departments to determine whether it needs to be filled. Other possible adjustments include increasing certain license or permit fees.
If Cambridge has been relatively immune to the financial woes plaguing other municipalities, it's due in part to its practice of underestimating revenues rather than overestimating, Depasquale said.
"I think a lot of cities and towns are having to reduce revenues because in these bad times, they're not going to make what they projected," he said. "We're not facing that, because of the conservative use we've had in our numbers."For example, while state aid numbers have included the possibility of revenue from proposed local meals and hotel/motel taxes, Depasquale said the city's calculations leave such numbers out. "Cambridge is highly unusual and may be in a class all by itself," said Michael Widmer, president of the Massachusetts Taxpayers Foundation, a business-backed nonprofit research group. "The vast, vast majority of cities and towns are under great fiscal duress and are using up the last of their reserves to get through" this fiscal year.
In a letter to the City Council in early February, City Manager Robert Healy noted that the city derives about 60 percent of its revenue from property taxes and that the property tax levy has increased an average of 3.4 percent over the past four years. This rate of increase will be difficult to maintain in the face of declining revenues in other sectors, Healy warned.
At mid-month, with the city about halfway through its budget discussions, Depasquale estimated that this year's levy increase will be around 5 or 6 percent, although he added that this could drop to 3 or 4 percent if the hotel and meals taxes were instituted.
The city's education budget of $130 million makes up one of the largest slices of its expenditures, and interim school superintendent Carolyn Turk said she has been working with department staff and school principals on making reductions without detracting from teacher quality and small classroom size.
"People took a look at their budget and were able to identify places where they might be able to streamline or they might be able to work differently," she said. For example, since the city's Department of Human Services offers afterschool programming, some schools are considering partnerships with that department to cut costs.All departments are also taking part in an energy savings campaign that city officials hope will reap significant savings, said city spokeswoman Ini Tomeu.
GreenSense calls on staff to turn off lights and office equipment when not in use and electricity usage in city buildings has decreased by 10 percent since the program's inception in October, she said.
Cambridge Arts Council director Jason Weeks, who has led his department's efforts in the City Hall Annex - a Gold LEED-certified building now decorated with "Turn it Off" stickers plastered on the light switches - said that the program has inspired good-natured competition among staff members.
While cost-savings initiatives continue throughout the city, Depasquale noted that Cambridge can only weather the storm for so long.
"Who knows how long this is going to go?" he said, referring to the dreary economic climate. "If this were to continue three years from now, we . . . may have to start looking more deeply into reduction of services."
For the time being, however, "I think we have positioned ourselves extremely well to say [the economic downturn] is here but we're going to keep our head above water."