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9/19/2018 5:51 p.m. Traffic Alert: Expect some traffic impacts from Paddy’s Cambridge Classic 5K Road Race Sunday Sept. 23, 10 a.m. Walden St. will be closed between Garden and Sherman streets from 7 a.m. - 6 p.m.  There will be rolling road closures of the streets along the race route to allow the runners to pass safely through the course.  More details »

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FY19 City Manager's Submitted Budget

Budget Cover

On April 23, 2018, Cambridge City Manager Louis A. DePasquale submitted his proposed Operating and Capital Budgets for Fiscal Year 2019 (FY19), as well as the proposed FY20-23 Operating and Capital Plans, to the Cambridge City Council. The proposed Operating Budget of $636.4 million represents an increase of $25.7 million, or 4.22%, over the FY18 Adjusted Budget. The proposed Capital Budget is $105.4 million.

The public is encouraged to review the budget document which contains the City Council goals, key initiatives, each department’s budget narrative, and this year’s capital projects to gain a deeper understanding of the FY19 objectives.

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City Manager Louis DePasquale's Message for the 2019 Budget

To the Honorable, the City Council, and the residents and taxpayers of Cambridge:

I am pleased to submit for your consideration my proposed Operating and Capital Budgets for the City of Cambridge for FY19 as well as the proposed FY20-23 Operating and Capital Plans. This Operating Budget of $636,451,110 represents an increase of $25,749,885, or 4.22%, over the FY18 Adjusted Budget. The proposed Capital Budget is $105,417,995.

Last year, the City Council prepared new goals, which are reflected in this FY19 budget submittal. This budget demonstrates the collaborative work of the administration and City Council to address the pressing needs for current and future Cambridge residents and visitors. As you will see in this budget document, many of the new initiatives and staff positions are a direct result of the City Council’s collective feedback. I want to thank the Council for its leadership and for its active engagement in the FY19 budget process.

The FY19 budget reflects additional resources to create and preserve affordable rental and homeownership opportunities for low, moderate, and middle-income families and residents. To assist in this important effort, the budget includes the funding of a Housing Ombudsman, and an Inclusionary Housing Planner. As I did last year, I am recommending another capital allocation funded by Building Permit revenue of $3,450,000 to support the City’s Affordable Housing Trust. This is an increase from the $2.8 million appropriated in FY18. Since 2002, and through FY18, the City has appropriated more than $147 million for affordable housing initiatives. These funds have been used to preserve or create more than 1,750 affordable units to date. The FY19 funds will supplement Community Preservation Act (CPA) and federal funding and will allow the City and its affordable housing partners to continue to advance an ambitious affordable housing agenda. In FY19, across several City budgets, there will be $23.9 million invested in funds dedicated to housing and homelessness.

The City successfully piloted a winter warming center in FY18. During FY19, the winter warming center will be expanded to four and a half months, and will continue operating out of the lower level of the Citywide Senior Center.  The warming center, a collaboration between Human Services, the Police, and BayCove Human Services as the operator, will help individuals who are homeless in Cambridge and not accessing the shelter system to stay safe and warm overnight during the winter.  Development of this winter resource aligns with the City’s new Coordinated Access Network, which uses a standardized assessment to target housing resources for highly vulnerable homeless clients.

To advance Vision Zero, the City continues to implement a wide range of engineering, education, and enforcement efforts aimed at reducing crashes, increasing respect among users, and creating a safer and more equitable transportation network that supports users of all ages and abilities. We will look to appropriate $4 million from the Parking Fund’s Fund Balance in FY19 for additional infrastructure and safety improvements in Inman Square.

Envision Cambridge, the citywide planning process, is advancing into the final phase, which will focus on public conversations, workshops, focus groups, and street team activities to help guide future change in the city. In FY19, Envision Cambridge will build upon this work to balance recommendations across focus areas and articulate priorities for implementation. Community conversations will inform management of future growth and develop strategies for how the city’s major corridors will evolve. To respond to current conditions, including growth in development and rezoning proposals, Community Development will be expanding capacity with three new positions in key areas such as inclusionary housing, economic development, and community outreach and communication.

In April 2018, the City expanded curbside compost pickup to all residential buildings with 1-12 units. This program now reaches 25,000 households.  In FY19, the City will also initiate a small business recycling collection pilot program, which is expected to serve up to 150 businesses by providing twice weekly pickup of three recycling receptacles per business at no cost. The City continues to serve as a leader in environmental sustainability and provides high quality services to residents and small businesses.

As part of our commitment to building a comprehensive early childhood system, the City is investing an additional $1.1 million in FY19 for the Birth to Third Partnership. These additional funds will more than double the number of very low-income children accessing high quality community-based preschools. The Partnership, a collaboration between the School Department and Human Services, will also expand home visiting programs, increase professional development workshops for all early childhood providers, and expand child development and behavioral health supports to early childhood programs. Human Services and Cambridge Public Schools will invest a total of $13.4 million in early childhood education and services in FY19.

In FY19, the City will continue to invest in public safety, with the addition of one deputy superintendent, one child psychologist, one social worker, and three new patrol officers to the Police Department. Additionally, the Department has created the Family and Social Justice Unit, which seeks to formalize its social justice approach to policing and increase its capacity to serve and protect the most vulnerable populations: juveniles, homeless, those suffering from mental illness and substance abuse, seniors in need of dependent care, and survivors of domestic violence and/or sexual assault. The new Unit will work to provide services that divert individuals from the criminal justice system toward the support services they need. The FY19 budget also formalizes the creation of the Office of Procedural Justice. Believed to be the first of its kind in the nation, the Office of Procedural Justice will focus on proactively monitoring data related to police-citizen interactions for indications of possible racial profiling, racially-biased policing, or use of force incidents. The Office will also assess the Department’s compliance with statutes, ordinances, and regulations aimed at mandating accountability.

The FY19 budget continues to fund and promote the importance of Science, Technology, Engineering, Arts and Math (STEAM) education through the robust support of the citywide STEAM Initiative and launch of STEAM at the Library. Our citywide efforts will create additional entry points to STEM disciplines that intentionally engage learners who have traditionally been underrepresented in STEAM programming and have not had access to experiences that would put them on a pathway to a STEAM career. This year’s budget includes funding for two full-time STEAM coordinator positions, and an additional $60,000 in programming support shared between Human Services and the Library.

The City is advancing a comprehensive initiative that supports the growth, skill building, and development of all City employees to cultivate an environment which reflects values of equity and inclusion. This year’s budget includes an additional $100,000 for diversity and inclusion training, and initial funds to develop a strategic guide for achieving diversity in City recruitment, hiring, retention, and promotion policies and practices. The City will also continue to expand training opportunities to enable staff to lead a thriving and diverse workforce.

Getting residents more engaged in local government, particularly around finance, has been a priority of mine. Every year, Participatory Budgeting (PB) brings out thousands of residents to brainstorm and vote for creative capital projects that are included in our Public Investment Budget. In FY19, the City will implement the seven winning projects from the fourth PB process, which include 100 trees, critical resource kits for the homeless, 10 flashing crosswalks, 10 water bottle fill stations, new musical instruments for Cambridge Rindge and Latin School, four living moss walls, and upgrades to the Gately Youth Center. More details on these projects can be found in the Public Investment Section and at pb.cambridgema.gov. In FY19, the City will launch its fifth annual PB process in which residents will decide how to spend $900,000 of the City’s FY20 capital budget.

In February 2018, the City held its second minibond sale to encourage residents to directly invest in Cambridge infrastructure. Residents could purchase minibonds in denominations of $1,000 for a maximum total investment of $25,000. The City sold $1,858,000 in minibonds to 217 residents, with a median submitted order of $5,000 and an average submitted order of $8,562. The City will use proceeds from the minibond issuance to support a variety of capital projects.

FY19 Operating Budget

Chart breaking down revenues by category in the FY19 Submitted Budget Chart breaking down expenditures by function in the FY19 Submitted Budget

The proposed Operating Budget of $636,451,110 includes the following:

  • Collaboration between the City and School administration, elected officials, and fiscal staff once again resulted in a successful School budget process. The City increased property tax support to schools to 6%. The School Committee adopted the School Department Budget of $191,069,505 on April 3, 2018.
  • A total property tax levy of $412,085,225 will support the General Fund Operating and Capital Budgets. This is an increase of $23,004,866, or 5.91%, from the FY18 property tax levy. The actual tax levy is determined in the fall as part of the property tax and classification process. In addition, the City can make adjustments to budgeted revenues as part of the process. As in past years, the City may be able to use increased non-property tax revenues at a higher level than what is included in the FY19 budget, once actual FY18 receipts and final state aid figures are known.
  • $2,000,000 in overlay surplus balances accumulated from prior fiscal years will again be used to lower the tax levy increase.
  • The City will recommend using $9,000,000 in Free Cash to lower the property tax levy increase, which is consistent with the City's financial plan.
  • The FY19 budget includes a 0% increase in the water rate and a 7.5% increase in the sewer rate. Resulting in a 5.6% increase in the combined rate as adopted by the City Council on March 26, 2018. This is the eighth consecutive year that the City has been able to produce a 0% water rate increase.
  • Parking Fund revenues will provide $22.2 million to support the operating budgets of various departments, including Traffic and Parking, plus an additional $883,000 to support capital projects such as traffic calming, energy efficiency initiatives, and bicycle infrastructure improvements.
  • The City Debt Stabilization Fund will provide $3.5 million to cover debt service costs.
  • This budget includes a 2.5% cost of living adjustment for all non-union employees and for those unions with settled contracts, a 5.4% increase in health insurance, a 11% increase in dental, and a 6.6% increase related to pensions.
  • The Health Claims Trust Fund is providing $11.5 million an increase of $2,480,000, to support the health insurance budget.
  • An Other Post Employment Benefit (OPEB) contribution of $2 million which is consistent with the FY18 allocation.
  • 25 full-time positions have been added to the FY19 budget to provide appropriate support for the growth in programs throughout the city. New positions include:
    • Six positions in the Police Department: one deputy superintendent, a child psychologist, a social worker, and three patrol officers.
    • Four positions in Public Works: a senior engineer for building permit reviews and inspections, a building services administrator, a project manager for municipal facilities improvements, and a public works off-hours supervisor.
    • Three positions in Community Development: an inclusionary housing planner, a communications manager, and an economic development planner.
    • Three positions in Human Services: a STEAM coordinator, a staff person for the Middle School Connector program, and an Early Childhood quality and professional development staff member.
    • Two positions in the Mayor’s office: deputy chief of staff and education liaison.
    • Two positions in Traffic, Parking & Transportation: a communications and outreach specialist, and an assistant for the Street Occupancy Permit unit.
    • One position in Executive: a housing ombudsman.
    • One position in Finance: an IT enterprise applications specialist.
    • One position in Emergency Communications: a public safety IT enterprise application specialist.
    • One position in Historical Commission: a survey director position going from part-time to full-time.
    • One position in Library: a manager of curriculum for STEAM initiatives. 

FY19 Capital Budget

Chart detailing the capital budget financing plan by source in the FY19 Submitted Budget

The proposed Capital Budget of $105,417,995 includes the following:

  • Sewer and stormwater projects at River Street ($34,000,000 - operating and sewer), The Port ($40,000,000); remedial construction ($1,250,000), climate change ($500,000), capital repairs ($5,000,000); and streets and sidewalks ($6,135,625.)
  • A $3,567,000 Pay-As-You-Go Public Investment allocation, which includes $1,100,000 in IT projects as part of the E-Gov initiative, $1,600,000 for City Capital projects, and $867,000 for the winning Participatory Budgeting projects.
  • As has been done over the past budget cycles, $5,000,000 will be bonded to fund Phase III of the Municipal Facilities Improvement Plan. This phase will establish a long-term facilities capital plan to address accessibility, building envelope, climate resiliency, energy efficiency, fire and life safety, historic preservation, HVAC, lighting, and mechanical systems.
  • Water service charges of $3,500,000 to cover all water-related capital projects.
  • On March 1, 2018, the City sold $82,465,000 in General Obligation Bonds to finance capital projects such as the King Open and Cambridge Street Upper Schools & Community Complex, sewer reconstruction, street and sidewalk reconstruction, and other municipal and school building renovations. The City’s AAA bond rating allowed the City to sell these bonds at a true interest cost of 2.7%. In February, the City sold $1,858,000 in minibonds to Cambridge residents at a rate of 2% for a five-year term.

Outlook

FY17 was another strong year financially for the City. Our sound financial practices have left the City with substantial reserves, including $211.1 million in Free Cash, $181.5 million in excess levy capacity, $47.4 million in the Debt Stabilization Fund, $26.7 million in the Health Claims Trust, $14.7 million in the Parking Fund Fund balance, and $9.95 million in the Water Fund Fund balance. We anticipate also ending FY18 in a very strong financial position.

The City has used $28.6 million in Free Cash in FY18 to date. Major appropriations include $9 million to lower the property tax rate, $1.2 million for E-Gov initiatives, $2 million for Municipal Facilities Improvements, $5 million for the Green Line Extension, an $8 million transfer to the Debt Stabilization Fund, and $2.5 million for snowstorm-related expenditures. I anticipate requesting appropriations before year-end to cover additional costs related to the demolition of Vail Court. I anticipate there will be additional Free Cash requests prior to June 30th.

We will continue to use our five-year financial and capital plan, debt and reserve policies, and the City Council goals as guides in our long-term planning to maintain stability and predictability in our budgeting process and adherence to our policies. We must also pay attention to the risk factors the credit rating agencies highlighted, such as material growth in our debt burden, substantial increases in OPEB liabilities, and significantly reducing our reserve levels. In addition, the City is projecting stable valuations in the near term with moderate increases in the out-years based on new construction, appreciation in values of existing property, and major rehabilitations. It is important that a healthy balance of development between residential and commercial be continued to ensure homeowners’ real estate taxes remain affordable.

Major priorities that will impact the budget over the next few years include bonded projects such as the Tobin and Vassal Lane Upper Schools; the rehabilitation of the Foundry Building; year two of our $5 million commitment to the Green Line Extension Project; municipal building expansion opportunities; recommendations from citywide planning efforts; and increases related to health insurance, pensions, and collective bargaining agreements. We recognize that not all capital projects are in our five-year plan, but we will continue to review and update the plan to ensure it reflects the needs and priorities of the community.

The long-term outlook for Cambridge continues to be very strong, which is confirmed by our consistent AAA bond rating. We have been able to absorb operating and programmatic costs associated with expanding services, cover increased salary and fringe benefit costs, and manage debt service costs. If we are faced with decreases in state and federal funding, the City will have to make difficult decisions on how community needs are prioritized and to what level programs are funded.

Conclusion

I believe that the initiatives and spending priorities recommended in this budget submission reflect not only the goals of the City Council, but also the priorities of the residents and taxpayers of Cambridge. Our effective short and long-term financial, economic, and programmatic planning strategies will help ensure that Cambridge can continue to provide the level of services that residents desire while maintaining the modest tax implications taxpayers have come to expect.

I encourage readers to review the City Council goals, key initiatives, each department’s budget narrative, and this year’s capital projects to gain a deeper understanding of our FY19 objectives.

Thank you for placing your trust and confidence in me to lead this great City.

Very truly yours,

Louis A. DePasquale

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