Growing Cambridge Budget Spooks City Leaders

Cambridge’s budget hit nearly $1 billion this year —and it’s got everybody on edge.

For the past several years, Cambridge has pursued ambitious spending programs using an ample flow of federal relief funds from the Covid-19 pandemic and property taxes. But as revenue streams dry up, City Manager Yi-An Huang ’05 said the city is going to have to take a hard look at its priorities.

“I think the next one to two budgets are going to feel very different than what we’ve been through over the last couple of years,” Huang said in an interview with The Crimson last week. “We’re going to have to really be funding everything out of property taxes.”

Huang, who oversees the budget process beginning this fall, said he is hopeful that painful cuts can be avoided.

“Obviously we are looking for efficiencies in the budget that don’t impact people and programs,” Huang said. “I don’t think we’re at the point where we’re saying we need to cut people or we need to see programs cut.”

Still, the possibility of belt-tightening has loomed large over both Huang’s office and the City Council.

“Money’s getting a little tighter in Cambridge,” Vice Mayor Marc C. McGovern said last week.

In June, the City Council unanimously passed the city’s proposed budget — a $70 million increase from the past year — but cautioned against further growth, with then-Finance Committee co-chairs Patty M. Nolan ’80 and Joan F. Pickett warning that continued spending at that level would be unsustainable.

Nolan said in a statement to The Crimson that Cambridge’s $81 million allocation from the federal American Rescue Plan Act in 2021 “augmented our ability to serve the community” — including funding and expanding a guaranteed income program for low-income residents.

But those funds are expected to be depleted by February. And though the Council is looking into continuing the program, it needs to identify a new permanent funding mechanism.

“Frankly, we’re coming out of the pandemic, and we had a lot of ARPA money that we could pour into a lot of the things that we really cared about,” Huang said.

Huang also said that the region’s slowing biotech investment and rising office vacancies could have “very concerning” ramifications for the budget.

However, Harvard Economics professor Edward L. Glaeser said he expected the issue would have fairly minor impacts on the city’s finances.

Glaeser said although recent growth in tax revenue has come disproportionately from industrial property taxes — including biotechnology investment — it still represents a small proportion of the city’s overall revenue.

“What’s relevant is not where the growth is coming from,” Glaeser said. “The relevant thing is just the overall amount of money that we’re getting from that source.”

Still, Huang said the shifting financial landscape for Cambridge could mean a higher property tax burden for residents. The Council is set to consider property tax rates for fiscal year 2025 on Monday.

“We’re going to see real challenges where, if commercial values fall, that’s going to put a lot more burden on the residential taxpayers,” Huang said.

Going forward, Nolan said, the city needs to be smarter about its budget practices.

“We hope to maintain services with our generous operating budget, possibly with some savings through smarter and more efficient spending,” she wrote.

But, McGovern said, it will be impossible to avoid making difficult adjustments.

“For the last 20 plus years, you know, we haven’t had to worry a whole lot about spending money,” he said.

But now, McGovern said, “we’re in some shaky waters.”

—Staff writer Benjamin Isaac can be reached at benjamin.isaac@thecrimson.com. Follow him on X @benjaminisaac_1.

—Staff writer Avani B. Rai can be reached at avani.rai@thecrimson.com. Follow her on X @avaniiiirai.