Three key factors are working in the city’s favor, Depasquale says: its AAA bond rating, plus the two projects Sullivan worked on in the finance committee—emergency funds and a high “levy” limit.

According to Depasquale, the city could levy $36 million more in property taxes before it reached its levy limit.

Raising property taxes would be one option for Cambridge, but Depasquale says city officials have not yet decided how they will cope with the cuts in aid.

While city officials are focused on maintaining the same level of city services, he says they are hesitant to shift the burden onto the taxpayers.

“We are very conscious of trying to keep the rate down as low as possible,” Depasquale says, adding that annual property tax increases over the past five years have been held to about 5 percent, which he characterizes as a “manageable number” for individual taxpayers.

Squeeze on the Schools

Because they receive the majority of the city’s state aid, Cambridge schools stand to lose the most during the financial crunch.

Cambridge spends more per student than any other city in the state but faces major gaps in achievement by poor and minority students and persistent declines in enrollment. The district is in the midst of a hotly-contested elementary school merger process, and the state announced this week that the Department of Education considers six of its schools to be underperforming.

The city will give its schools a 3 percent budget increase in 2004, amounting to about $2.6 million, according to Depasquale.

But the schools received a 4.9 percent increase this past year, and the increase in the coming budget will likely be much smaller than expected, says school committee member Alice L. Turkel.

Turkel says the city has been generous in funding Cambridge schools. Only $13 million of the city’s $43 million in state funding is earmarked for education, but the city chooses to spend more than $25 million of the state aid on schools.

But the system still faces financial constraints, Turkel says, which are putting more pressure on the school committee to through push the elementary school mergers.

“The monetary pressure has been upped,” she says. “The going is getting tough.”

Both Turkel and Sullivan, who as mayor chairs the school committee, agree that the mergers are ultimately aimed at helping schools improve the quality of education. But they say that at the same time consolidation will streamline spending.

“This actually will allow the budget to be used better,” Sullivan says. “I think it’s a better use of resources.”

—Staff writer Christopher M. Loomis can be reached at cloomis@fas.harvard.edu.