A Cambridge property tax rate classification was accepted Monday for a tax levy increase of 6.9 percent, to $725.4 million, lower than the 8 percent increase felt last year but still an increase: for homeowners, up 4 percent from last year to a rate of $6.95 per thousand dollars of value, subject to Department of Revenue approval; for commercial property owners, up 21 percent to a tax single rate of $16.99 per thousand dollars of value.
The city is keeping two-thirds of the burden on businesses rather than homeowners in support of a billion-dollar operating budget, and some city councillors and staff noted why that could be worrisome: Commercial real property values have fallen by 23 percent within the past two fiscal years to $25.8 billion, and growth added to the tax base dropped by more than 47 percent, to $12.7 million.
“We can’t continue to spend as though we remain flush when our commercial tax revenues are down, and it looks as though they’re going to stay down for the next few years until the biotech industry sorts itself out and until we have a new administration in Washington that isn’t continually punishing us,” city councillor Cathie Zusy said during a special hearing that paused the regular council meeting. “We cannot continue to punish the commercial sector with higher tax rates. Last year we gave them a 22 percent rate. This year, we have a 21 percent rate. They are our bread and butter, and if we make Cambridge inhospitable, they’re going to go elsewhere.”
Conscious of such concerns, spending is being curtailed, staff and other councillors said, and projects are being eyed for expense.
“There been some times when we’ve gone overbudget, which we are all hoping to learn from. We should acknowledge that, yet we are reining it in. We are looking very carefully at all of our projects,” said Patty Nolan, the councillor who co-chairs the Finance Committee and will help lead a budget process beginning next month. Another councillor, Marc McGovern, agreed that “the days of building $300 million schools are not going to happen for a long time, right? And we have to be more mindful of that.”
Doubt was cast on when business will come back, though, whether from building fees and other economic activity from major developments – including plans for a neighborhood to be built by the company Healthpeak – or Kendall Square industries.
“The more that I talk to people in biotech, the more I’m worried that it will not come back. We’ve always been the most innovative place, but because we’ve gone from needing the best researchers to needing the best robotics, a lot of the best companies in biotech are now starting in California and not here,” vice mayor Burhan Azeem said. “I’m sure biotech will have a comeback, but will it have a comeback here?”
The money squeeze means the city’s budgets are growing more slowly but continue to pay for priorities such as housing, community safety, environmental justice and universal prekindergarten, staff said. Nearby communities have worse budget problems and are cutting employee positions – so far not an issue in Cambridge.
Cambridge’s residential and commercial rates remain lower than in surrounding communities. For instance, in neighboring Somerville with its smaller commercial base and in which residents carry 67 percent of the burden, the homeowner rate is $10.98 per thousand dollars and business property owners pay $18.94 per thousand. (The figures compare Cambridge’s current rates with Somerville’s rates from the previous year.)
The financial situation was put into perspective by city manager Yi-An Huang:
“We remain one of the lowest tax rates, both on the residential and commercial side, compared to other municipalities. We also have some of the highest property values, and so tax bills are pretty high. We also have some of the highest budgets, and in terms of the size of the city budget we are providing broader and deeper services, [some] in support of our most vulnerable community members. We’ve been able to use those resources in ways that the council and the community ask, and the city staff have seen very deep needs. That’s the environment we’re continuing to face. … I wouldn’t say that we don’t have money. We have flexibility that many other municipalities lack at this point [but can’t] have our ambitions exceed our resources.”
“There are so many things that we want to do, and we are facing a really significant economic slowdown,” Huang said.
The tax rate hearing comes after the budget it pays for because it relies on a state trigger. The council on Monday took votes affirming the percentages of tax
levy for each class of real and personal property and to adopt a residential exemption of 30 percent for qualifying owner‐occupied properties. The city has additional exemptions for eligible elderly residents, blind taxpayers, veterans and surviving spouses based on residency, income and assets.
