An update from the City Manager

To the Honorable, the City Council:

As we begin the summer, I continue to be grateful to the Mayor, Vice Mayor, and Councilors for the opportunity to serve our community. Cambridge is an amazing city. We are home to historic neighborhoods built before American independence as well as gleaming new buildings that are pushing the frontiers of technological innovation. We have a commitment to preserving our values and history, but also the courage to embrace new ideas and expand equal rights.

This year, we are celebrating the twentieth anniversary of the first same-sex marriage in America which was performed at Cambridge City Hall. We are an incredibly diverse and beautiful community and, in this grand American democratic experiment, we are a shining example of how to live and make decisions together.

I started as City Manager two years ago and my hope has been to build on all our strengths and successes while finding opportunities for change; to honor what has worked well, while being open to feedback and willing to do things differently. A core commitment has also been to bring greater transparency to our City. We are in a national crisis of democracy where trust in institutions is at an all-time low. Truth is being questioned. Our views are becoming more polarized. And people feel distant from the government that is meant to represent them.

My hope is that we can model something better in our local democracy and that Cambridge can be a place of greater shared trust and legitimacy. Our community holds many different and sometimes conflicting views. It’s unlikely that we will agree on every issue, but we can discuss and debate, listen to each other, search for consensus, allow for compromise, and accept decisions that we may not agree with.

We have so much work ahead of us: unaffordable housing, a struggling public transit system, the climate crisis, and an unfinished fight for racial and economic justice. I wake up energized for hard conversations because we need to work for a better world. And I’m grateful for the City Council, City leaders and staff, and everyone in our community for struggling together, living together, and moving forward together.

FY25 Budget

Following the Councils’ recent adoption of the F25 Budget on June 3, I’m proud that we have built a budget that reflects the goals and priorities of the Council and the community. This is one of the most important things that we do as a City, though in conversations with friends and residents, I’ve found that some additional explanation is often helpful. Similar to our personal finances, a budget is not an exercise that starts with a blank sheet of paper.

Rather, a budget is built over time and modified incrementally. We go into each year with many of the prior year’s expenses: rent, car payments, cell phone plans, health insurance co-pays, grocery lists, kids’ sports, Netflix subscriptions, and so much more. A new year presents choices, opportunities to re-prioritize and mark new directions, but changes are made more often with a scalpel than a chainsaw.

Our budget is a reflection of our values and I’m proud of the choices that we have made. The conversations we are having every week at City Council are reflected in this budget and we are putting tremendous resources towards our highest priorities.

We are investing $47 million toward affordable housing, $16 million toward initiatives addressing homelessness and housing instability, $34 million to expand universal preschool, $17 million toward our Climate Net Zero goals, and $13 million toward Vision Zero and Traffic Safety.

The Cambridge Public Schools represent the single largest part of our budget at $270 million and we have made significant increases this year in teacher salaries, including to support a longer school-day which is a long-time School Committee priority.

We also continue to support so many of the important programs that have been built over the years in collaboration with the Council: services and support for people who are unhoused, job training and continuing education programs, urban composting that is expanding to serve both residents and small businesses, our urban forestry division that is planting more than 1,000 trees every year, and so much more.

We have also made new funding allocations in response to Council policy priorities, including $490,000 to expand after-school programming, $400,000 to support the new American Freedman Commission that was passed into ordinance last December, and $250,000 for increased rental assistance to tenants at risk of eviction.

This year, we have continued to build closer collaboration and engagement with the City Council on the budget process. Councilor Paul Toner who chairs the Economic Development and University Relations Committee held a February hearing on the economic environment regarding lab, office, and retail vacancies and their expected impact on City revenues. Throughout the spring, we worked closely with Finance Committee Co-Chairs (Councilor Patty Nolan and Councilor Joan Pickett) on ensuring a transparent budget process.

We held Finance Committee meetings to review the operating, capital, and police budgets to receive input from the Council, and held two full days of hearings on the submitted budget in May, discussing key departments and initiatives.

We are a unique community that has the resources to make significant investments beyond basic services and infrastructure, but a major theme over the course of this budget has been building a deeper understanding of the potential economic challenges ahead. While our economic outlook remains strong, there is a clear slowdown in new developments.

Lab, office, and retail rents are soft and while Cambridge is performing better than most urban areas, we are not expecting the kind of revenue growth that we have experienced over the last ten years – and in fact, building permit revenue continues to decline as we come down from our peak in FY23. While we will continue to be able to make investments in priorities, moderation will be required as we move forward and we will need to make choices about where to invest.

This is particularly true as we consider our capital portfolio. We have built three new state-of-the-art and award-winning schools over the last ten years and made greater investment in maintaining and repairing municipal buildings. However, we are looking at significant capital demands going forward, including additional school projects, deferred maintenance of city buildings, building electrification projects, and much more.

In anticipation of the need to moderate our budget growth and the need to work out decisions with the Council and the community, we have reduced the FY25 capital budget by 50% from last year’s original projection to preserve flexibility and allow for prioritization. We will continue to work closely with the Finance Committee and broader community as we begin to make decisions for FY26 and beyond.