Healy Presents Two Financial Forecasts for Next Five Years

Buoyed by the extension of his contract last week, City Manager Robert W. Healy presented his five-year financial projections to the Cambridge City Council Monday.

Healy's contract was extended by a vote of 8-1 October 24. In his 24-page report, dated that day, the city manager outlines two possible financial situations the city can expect in the next five years.

The first scenario is based on the level of state aid to Cambridge remaining at its present level. The second scenario anticipates a two percent annual growth in state funding over the next half-decade.

Both projections anticipate a $311,788,245 total budget for fiscal year 1995.

Healy's projections are based on several conditions. Both scenarios assume that the city will have no employee wage growth in fiscal years 1995 and 1996, except for school teachers.

The scenarios also rely on health insurance costs growing only six percent a year, "compared with the double digit growth of the recent past," Healy admitted. And the projections expect that city pension costs will grow at just 10 percent a year.

Healy said that a revenue gap will develop in 1997, even if his conditions are met. He noted that for each one percent in employee salary growth, an additional $1.1 million in taxes will be required to offset the difference.

While civic groups, including the Cambridge Civic Association, the city's left-wing political organization, have charged the city with being too expensive to run, Healy wrote "there is no indication of the need at the present time for immediate reductions in expenditures."

In an interview Monday, Healy said he is determined not to dip into the city's $15 million savings.

"Once you start dipping into fund balance, what will you start using for operating expenses the next year?" he asked.

"We treat the fund balance as a savings account for structural improvements," Healy added.

Cambridge Mayor Kenneth E. Reeves '72 said he hoped the city's collective-bargaining efforts will succeed in keeping employees' salaries at their present level.

"Everybody wants to be recognized and rewarded for their efforts," he said Monday. But he added that the city might implement an incentive program for its employees in lieu of any salary increases.