A controversial proposal to slash state taxes by rolling them back to their 1988 levels could conceivably increase the overall tax burden on Cambridge residents, City Manager Robert W. Healy told the City Council last night.

Healy estimated that a petition by the Citizen's for Limited Taxation (CLT), which will appear on the November ballot, would cost the city between $12 and $25 million in state aid. To compensate for the loss, Healy said the city would have to raise the city property tax levy by as much as $7.4 million.

The net result, he said, could be an slight tax increase for the average city resident.

"It's a Catch-22," said Healy. "While we might save Cambridge property owners in state taxes, that [savings] will be transferred to or exceeded by the increase in property taxes."

Although a 1980 state law known as Proposition 2 1/2 restricts the amount of property taxes cities are allowed to levy, Healy said that Cambridge, unlike many Massachusetts towns, has not yet reached the limit imposed by that law.

No 'Doom and Gloom'

While Healy maintained that he was not "crying gloom and doom," he estimated that the city could maintain its current level of services without a tax increase for only one year.

He added that a jump in the property tax would allow the city to continue its current programs in fiscal year 1992 but said that in the following year the city would have to absorb cutbacks in basic city services, such as hospitals and police and fire protection.

"These are services that affect working families," said Barbara W. Ackermann, a former mayor of Cambridge, who introduced a series of speakers to discuss the effect of the cuts on mental health, schools, the elderly and other city services.

"We've got to ask ourselves who are the people getting services. Who are the people facing cuts," said Mayor Alice K. Wolf. "The changes are real. They will affect real people."

Newscasts Criticized

In other business the council condemned a series of newscasts shown last week on WCVB-TV that attempted to uncover several inequities in the rent control system.

The news stories attacked Vice Mayor Kenneth E. Reeves '72, State Sen. Robert Wetmore (D-Barre) [See related story] and several wealthy tenants who live in rent-controlled apartments.

Substitute Order

The original council order--sponsored by Councillor William H. Walsh--praised the report for exposing the failings of rent control. But the council's pro-rent control majority voted instead for a substitute order berating the newscasts as one-sided.

Reeves, who used his status as a rent-controlled tenant as a selling-point in his campaign last year, labeled the story a "hatchet job."

"People who don't like rent control don't like any form of it." said Reeves. "If you don't like the system you will argue anything to cut it down."