Cambridge Mayor Kenneth E. Reeves '72 warned that Congressional budget cuts will hurt Harvard as well as low-income residents of Cambridge in a speech at the Institute of Politics to about 20 people yesterday.

"University towns may need to start taxing the real bases of wealth in their community," Reeves said noting that while Harvard makes a $2 million "good will" payment to Cambridge each year, it would be taxed $55 million if its property were fully assessed.

Reeves warned that Cambridge may have to renew its campaign to gain taxing authority over its universities if Congress imposes cuts in aid to municipal governments.

He said that the Community Development Block Grant (CDBG) for Cambridge is expected to drop by $1 million in the coming year.

"We will have to re-examine the feasibility of maintaining our current network of human services," Reeves said, while detailing programs targeted for cuts by the 104th Congress. "For this city choosing between services for its older and younger citizens will be a very wrenching reality."

Perhaps the most dramatically adverse impact Reeves detailed was that from expected cuts in affordable housing programs.

Already reeling from the elimination of rent control earlier this year, Cambridge tenants will not be able to expect government funding to help pick up the slack Reeves said.

"We've been investing in keeping families in the city," Reeves said. "This cut in the CDBG will lead to a drop in affordable housing."

Reeves said these cuts will exacerbate demographic trends which indicate working families with children are leaving the city.

Citing the importance of diversity andindividuality among Cambridge's 96,000 residentsReeves emphasized the city's unique ability tointegrate races, classes and cultures.

"Cambridge is a city that has a lot of beliefthat we can solve human problems," Reeves saidciting the tripling of jobs for Cambridge youthduring his four-year tenure.

Reeves also described the full array of humanservices offered by Cambridge to its residents andexplained facets of public finance for the city.

Some of those services, especially the networkof hospitals and care centers which serve theelderly population, are in danger of being scaledback if Medicare levels drop.

The mayor emphasized the complexity ofCambridge's economic situation saying that effortsto balance the budget after cuts would cause achain reaction of deficits.

Since two-thirds of Cambridge property taxrevenues come from commercial spaces, any setbacksfor the area's biotechnology and software researchfirms translate into economic shortfalls for thecity Reeves said.

Reeves said cuts in MIT's federal researchbudget will stifle the development of area firmswhich are started by entrepreneurs capitalizing onthe research done at the Institute.

(The mayor said he was not as concerned aboutcuts in Harvard science funding saying that mostof its federally-sponsored research takes place inBoston at the Medical School and the School ofPublic Health. And he added that most of Harvard'sother research is of a less applied nature leadingto fewer entrepreneurial projects in the city.)

Despite the talk of budget cuts, Reeves stillmanaged to strike an optimistic note, callingCambridge "an enchanted city in the Athens ofAmerica" and boasting of its $16 million annualbudget surplus.

The speech concluded by noting that the citycan strengthen its commitment to human serviceswithout increasing its reliance on federal fundsby luring tourists and broadening its tax base