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City Manager Submits FY18 Budget To City Council

caution sign The information on this page may be outdated as it was published 6 years ago.

Budget Cover

Download FY18 Submitted Budget [PDF]

View Key Initiatives

Download Hearing Schedule [PDF]

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

I am pleased to submit for your consideration my first proposed Operating and Capital Budgets for the City of Cambridge for FY18 as well as the proposed FY19-22 Operating and Capital Plans. This Operating Budget of $605,031,310 represents an increase of $28,633,678, or 4.97%, over the FY17 Adjusted Budget. The proposed Capital Budget is $124,771,815.

Over the last six months, the Finance Committee Chair, Budget Director, and I have been going out to neighborhood meetings to discuss the City’s budget and listen to suggestions from community members. To keep this community connection throughout the year, I have established a City Manager Advisory Committee that will meet quarterly to discuss community issues and develop potential solutions.

In January, we met with the Council’s Finance Committee to listen to their ideas around community needs that they would like addressed in the FY18 Budget. This budget reflects their guidance and goals, and 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 their leadership and for their active engagement in the FY18 Budget process.

Getting residents more engaged in local government, particularly around finance, has been a priority of mine. Every year, Participatory Budgeting brings out thousands of residents to brainstorm and vote for creative capital projects that are included in our Public Investment Budget. In FY18, the City will implement the seven winning projects from the third Participatory Budgeting (PB) process, which include solar panels on the Main Library roof, flashing pedestrian lights at six crosswalks, solar-powered bus tracking displays at 10 high-use bus stops, kinetic energy tiles at Cambridge Rindge and Latin School and in Harvard Square, four water bottle fill stations, upgrades to the Moore Youth Center, and the commissioning of murals and street art in various parts of Cambridge. In FY18, the City will launch its fourth annual PB process in which residents will decide how to spend $800,000 of the City’s FY19 capital budget. Idea collection will take place from June 1 - July 31, 2017 and voting will be held from December 2-8, 2017.

In February, the City allowed residents to directly invest in Cambridge infrastructure by purchasing minibonds. Residents could purchase minibonds in denominations of $1,000 for a maximum total investment of $20,000. The City’s $2,000,000 in minibonds sold out in six days. 230 orders were fulfilled, with a median submitted order of $5,000 and an average submitted order of $8,586. The City will use proceeds from the minibond issuance to support capital projects such as school building renovations, municipal facility upgrades, and implementation of the Complete Streets Plan.

The City will continue to create and preserve affordable rental and homeownership opportunities for low, moderate, and middle-income families and residents. For the first time, I am recommending a $2,800,000 capital allocation funded by Building Permit revenue to support the City’s Affordable Housing Trust. In addition, the newly created Richard C. Rossi Affordable Housing Trust Fund will provide limited financial assistance to Cambridge residents and households who are at risk of losing housing in Cambridge. Through FY17, the City has appropriated a total of $134,200,000 in Community Preservation Act funds for affordable housing initiatives. Since 2001, the City has created or preserved over 1,700 units of affordable housing throughout Cambridge. The Concord Highlands project, which received funding from the Affordable Housing Trust, will add 98 new units of mixed-income affordable housing. The process of transforming the Vail Court property into affordable housing will continue in FY18, and we are continuing efforts for the preservation of affordability at buildings with expiring use restrictions.

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 $4,000,000 from the Parking Fund’s Fund Balance for additional bicycle infrastructure in Inman Square. Traffic, Parking & Transportation will also be expanding the pay-by-phone program citywide.

Envision Cambridge, the citywide planning process, is advancing into the second phase, which will focus on public conversations, workshops, focus groups, and street team activities to help guide future change in the city. To respond to current conditions, including growth in development and rezoning proposals, Community Development will be expanding capacity with four new positions in key areas such as urban design, project review, community outreach and communication, data management and analysis, and program development and management.

The Curbside Organics program will be expanded citywide. Included in the budget are four new laborers to support this effort. The overall goal of this plan is to help the City reduce trash by 30% by 2020 and 80% by 2050 from a 2008 baseline. $1,000,000 will be appropriated from Free Cash to fund the necessary equipment for this expansion. Next spring, Public Works will also launch a small business curbside recycling program. Qualified businesses can expect a once per week pick-up.

Many homeless individuals in Cambridge are not accessing the shelter system to stay safe and warm overnight during the winter. Human Services will be looking for rental space to create a winter warming center designed to provide a hot meal, a safe place to rest, and shelter from inclement weather. Funding of $250,000 has been included for the operations of the center.

As part of our commitment to building a comprehensive early childhood system, the City is investing an additional $1,000,000 in FY18 for a total of $2,300,000 for the Birth to Grade 3 Partnership. A pilot scholarship program promoting access to high quality community programs for three and four-year-olds from low-income families has been developed, as well as an intensive quality improvement system designed to help community preschool programs improve their quality rating scores.

The City remains committed to maintaining our status as a Sanctuary City. The new Commission on Immigrant Rights & Citizenship is developing a needs assessment to identify the unmet needs pertaining to immigrant legal rights, citizenship, and connection to City services and local resources. Funds for an Outreach and Referral Specialist, translation equipment, and costs for outreach and informational materials are included in the budget.

Cambridge Arts will add a Community Arts Administrator position to increase capacity to grow large-scale public programming, expand external fundraising, and build sustainable partnerships in the community that support programming. This position will also support the Cambridge Arts Creative Marketplace, an artist education and economic development program designed to foster increased awareness of the city's vibrant arts sector and heightened participation and support of the arts by employees and businesses based in Cambridge.

The Animal Commission, with the addition of another animal control officer, will extend coverage through the weekends and until 7:00 p.m. on weekdays. The Commission will also participate in more educational events, such as visiting elementary schools and senior centers to talk about what residents should do when they encounter wildlife in Cambridge.

Personnel and the Office of Equity and Inclusion will be progressing our comprehensive plan for achieving diversity in City hiring, retention, and promotion policies and practices. We will also be implementing a sexual orientation and gender identity competency training for the entire City workforce.

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 FY18 objectives.

FY18 Revenues by Category Chart

FY18 Expenditures by Function Chart

The proposed Operating Budget of $605,031,310 includes the following:

  • A total property tax levy of $395,001,870 to support the General Fund Operating and Capital Budgets. This is an increase of $22,327,783, or 5.99%, from the FY17 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 FY18 Budget, once actual FY17 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 $12,200,000 in Free Cash to lower the property tax levy increase, which is consistent with the City's financial plan.
  • A 0% increase in the water rate and a 7.7% increase in the sewer rate, resulting in a 5.6% increase in the combined rate as adopted by the City Council on March 27, 2017. This is the seventh consecutive year that the City has been able to produce a 0% rate.
  • Parking Fund revenues will provide $8,754,610 to support the operating budgets of various departments.
  • The City Debt Stabilization Fund will provide $2,000,000 to cover debt service costs.
  • Collaboration between the City and School fiscal staffs once again resulted in a successful School budget process. The City increased property tax support to schools to 7.6%. The School Committee adopted the School Department Budget of $183,046,445 on April 4, 2017.
  • A 2.5% cost of living adjustment for all non-union employees and for those unions with settled contracts, a 0% increase in health insurance, a 0% increase in dental, and a 5.85% increase related to pensions. The 0% increase in health insurance is due to fewer high-cost, chronic claims and employees taking advantage of preventative programs.
  • The Health Claims Trust Fund is providing $9,020,000, an increase of $100,000, to support the health insurance budget.
  • An OPEB contribution of $2,000,000, which is consistent with the FY17 allocation.

27 full-time positions have been added to the FY18 Budget to provide appropriate support for the growth in programs throughout the city. New positions include:

  • Six positions in Public Works: a four-person crew to pick up curbside food scraps as part of the expansion of the organics program citywide, a senior level staff person to support urban forestry initiatives, and a building projects coordinator.
  • Five positions in Community Development: a second deputy director, an urban designer, two community planners, and a business analyst.
  • Three positions in Human Services: three Community Schools program directors to support increased enrollment.
  • Three positions in Finance: an IT web designer, an IT technology training coordinator, and a construction and sustainable procurement specialist in the Purchasing Department.
  • Four positions in Emergency Communications: a public safety IT manager, a public safety IT director, and two technical support positions.
  • Two positions in Law: an assistant city solicitor and a public records access officer.
  • One position in Arts Council: a community arts administrator.
  • One position in Animal Commission: an animal control officer to extend hours of operation.
  • One position in Traffic, Parking & Transportation: an engineer technician.
  • One position in Library: a manager of innovation and technology.
FY18 Capital Financing Plan Chart

The proposed Capital Budget of $124,771,815 includes the following:

  • The continuation of sewer and stormwater projects at Alewife ($6,000,000), Cambridgeport ($3,000,000), Harvard Square ($2,625,000), and The Port ($12,934,000); remedial construction ($1,000,000), climate change ($500,000), and capital repairs ($5,000,000); streets and sidewalks ($7,089,540); and renovations for the Harvard Square Kiosk and Plaza ($2,000,000).
  • Bond proceeds of $60,000,000 will be used to fund construction services for the King Open and Cambridge Street Upper Schools & Community Complex. Other school projects include a new roof at the Fletcher Maynard Academy ($1,500,000) and boiler replacement at the Amigos School ($500,000). 
  • A $6,606,000 Pay-As-You-Go Public Investment allocation, which includes $2,300,000 in IT projects as part of the IT E-Gov initiative, $1,600,000 for City Capital projects, $2,000,000 for the Municipal Facilities Improvement Plan, and $706,000 for the winning Participatory Budgeting projects. This represents a $926,000 increase in property taxes from last year. 
  • In addition to the $2,000,000 listed above in Pay-As-You-Go, $5,000,000 will be bonded to fund Phase II 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, 2017, the City sold $56,545,000 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 the true interest cost of 2.3%. The $56,545,000 included $21,045,000 in sewer bonds. In February, the City sold $2,000,000 in minibonds to Cambridge residents at a rate of 1.6% for a five-year term.
FY18 Capital Appropriation Plan Chart

Outlook

FY16 was another strong year financially for the City. Our sound financial practices have left the City with substantial reserves, including $202,468,578 in Free Cash, $168,285,713 in excess levy capacity, $40,994,946 in Debt Stabilization Fund, $22,274,872 in Health Claims Trust, $14,737,582 in Parking Fund Balance, and $10,338,547 in Water Fund Balance. We anticipate also ending FY17 in a very strong financial position.

The City has used $34,791,300 in Free Cash to date. Major appropriations include $9,000,000 to lower the property tax rate, $1,200,000 for E-Gov IT initiatives, an $8,000,000 transfer to the Debt Stabilization Fund, $5,250,000 for construction costs associated with 859 Massachusetts Avenue, $3,700,000 for the taking of Vail Court, $3,700,000 for Fire vehicles and equipment, and $2,875,000 for snowstorm-related expenditures. I anticipate requesting appropriations before year-end to cover municipal and school building security systems, a new customer relationship management system, curbside organics equipment, the Foundry, and the demolition of Vail Court.

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. Our financial projections indicate that we will be able to produce future budgets that will reflect a moderate growth in the property tax levy, which is our primary revenue stream. 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.

Major priorities that will impact the budget in the near term include bonded projects such as the King Open and Cambridge Street Upper Schools & Community Complex; the Tobin and Vassal Lane Upper Schools; municipal building expansion opportunities; recommendations from citywide planning efforts; the School’s Operating Budget due to increased enrollment; 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.

While overall economic conditions are strong, some uncertainty remains around possible federal and state budget reductions due to our status as a Sanctuary City. 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 levels 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.

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

Very truly yours,
Louis A. DePasquale

Download FY18 Submitted Budget [PDF]

Page was last modified on 7/24/2023 9:54 PM
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