Cambridge got its first taste of the fiscal effects of the tax-cutting Proposition 2 1/2 yesterday, when city officials opened field bids for the renewal of a bond issue to renovate city schools.
When the bond was floated in June, banks offered interest rates as low as 3.62 per cent. When yesterday's bids were opened, financing charges averaged 10.135 per cent and ranged as high as 12 per cent.
"It's not that the city is any different from before. It's only that Proposition 2 1/2 has taken away our ability to levy taxes," Cambridge City Manager James L. Sullivan said yesterday. Sullivan said the increase in interest rates could cost the city more than $600,000, adding that the new rates were "almost criminal."
"But it's not the fault of the banks--it's the fault of an ill-conceived proposal," Sullivan said.
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