1992: The Year the Money Ran Out?

Years from now, older Cambridge political hacks may look back on the 1992 fiscal year and speak with warmth about the good old days.

They may talk about job security, balanced budgets and an abundance of municipal services.

And if, as expected, Massachusetts keeps cutting back on local aid and the regional recession continues, they will call fiscal 1992 the last of the golden years.

Last Month, after days of public hearings, the City Council approved a $264 million city budget that included no layoffs for municipal workers, few significant cuts in services and a moderate increase in taxes and surcharges.

The budget, which covers the fiscal year beginning July 1, seems rock-solid, especially in comparison with similar documents from other municipalities around the state. But even in Cambridge, the budget is showing sings of strain that may foreshadow trouble in the future.

"We have historically been coming in above our revenue projections, this year we're coming in below," says Councillor Edward N. Cyr, who chaired the budget committee. "It was a significant turn-around in one year," he adds.

That revenue loss stemmed from a 15 percent drop--off in revenue from new construction, recession-level falls in surcharges from building permits and what in the end may amount to a 20 percent fall in local aid from the state.

And while hearings are continuing into June to deal with last-minute changes in the budget, the city will likely take up all of its fiscal slack by coming within $1 million of its $130 million levy limit--the property tax ceiling established by Proposition 2 1/2, a 1981 law which limits annual property tax increases to 2.5 percent.

Harsh Measures Ahead?

According to City Hall's senior budget analyst David Holland and City Clerk Joseph E. Connarton, the revenue constraints next year might force the city to take tough measures to balance the budget.

With non-tax revenues falling off dangerously, and property taxes still limited by Proposition 2 1/2, they say, Cambridge could be forced to cut services, lay off city workers or attempt a costly one-year override of Proposition 2 1/2, as it was forced to do in 1982.

"Our levy capacity is not going to increase by as much because the new development is not going to increase as much," explains Connarton. "There's not that much being built."

The strain in the budget was most evident in the $71.5 million line item for the School Department. The School Department, run by the School Committee and Super intendant Mary Lou McGrath, receives its funding from the council but controls its own expenditures.

This year, like every other year, the School Committee made much political noise and requested additional money from the council, but for the first time in recent history, the council and city manager, citing budgetary constraints, provided unwilling to give.

"I think that the majority of the people on the School Committee felt that history had proven that the city council and the city manager would provide additional money," says Bert Giroux, the public information administrator at the School Department. "The city manager made it clear from the outset that in the past the money had been available."

The School Department, which is responsible for its own personnel, sent layoff notices to 29 non-tenured teachers in April.

"I'd say this is the most biting budget since 1982. That time we were really hit hard," says Giroux. "Everyone's predicting dire consequences next year."

But all the news from municipal economists isn't dismal. Budget analysts, politicians and administration officials all agree that for the moment, and in all likelihood for the foreseeable future, Cambridge will be among the most fiscally healthy municipalities in the state.

"I think the key issue is that Cambridge is probably the city in the best shape," says Cyr. "We are acting prudently in the crisis of the moment. We have more room under levy than anyone else and we have a better consensus on how to solve the problems. We can cut $1 million from the budget and not hurt anyone. We do not have significant cuts in services amd we still have significant reserves we have not touched."