Mass. Governor Deval L. Patrick ’78 announced on Wednesday that the City of Cambridge will lose approximately $2.6 million in local aid for the fiscal year ending June 30—a nearly 10 percent decrease from the $26.7 million in local aid originally allotted.

The cut is part of a broader $128 million reduction announced last Friday. Patrick said the cut will be expanded to $375 million next year, pulling another $6.6 million from Cambridge, as part of an effort to close a $1.1 billion shortfall in the state’s budget.

The state provides local aid to cities and towns to support essential services like police, fire, and trash collection. The budget reduction is expected to force local officials state-wide to reduce or cut these services and lay off employees.

“This is by far the worst financial situation we have had in the Commonwealth in the time that I’ve been an elected official,” said State Representative and former Cambridge mayor Alice K. Wolf.

While some cities will make immediate cuts to balance their budgets, others, including Cambirdge, may be able to eke by without such drastic measures, said Cambridge Vice Mayor Brian P. Murphy, who said the city should be able to slow down programs rather than make wholesale cuts.

“This year, we can probably make up the cuts through efficiencies, delays in hiring, and using reserves,” he said.

The city manager is currently looking at this year’s budget to find where the cuts can best be absorbed, Murphy added.

But coping with the expanded $6.6 million cut for fiscal year 2010 will likely be more challenging, he said, requiring the city “to take a hard look at programs and services.”

According to Wolf, Cambridge will suffer disproportionately, since the city mainly receives additional assistance—unrestricted, general purpose funds—and lottery assistance, which are being cut, as opposed to protected Chapter 70 school assistance.

Patrick is proposing several schemes to raise revenue in order to minimize the local aid cut for the coming fiscal year, including a 1 percent increase in statewide taxes on meals and hotels, which would raise $150 million to go directly to towns and cities.

In addition, Patrick will attempt to give local communities authority to raise the meals and hotels taxes an additional percentage point; he also plans to eliminate a property tax exemption for telecommunications companies.

Furthermore, Patrick is encouraging local officials to cut health care costs for unionized workers, either by putting employees into the state’s Group Insurance Commission health plan or by developing health care plans that would be as cost efficient as the state’s plan.

According to Murphy, Cambridge’s current health care program is actually cheaper than the state’s plan.

In the last economic downturn—between 2002 and 2004—about 14,500 teachers, firefighters, librarians, and other local employees lost their jobs statewide as a result of comparable local aid cuts made by then-governor Mitt Romney.

Local officials said the financial strains of the cuts would be felt immediately.

“This a difficult economic season and it’s going to get worse before it gets better,” said Cambridge city councilor Sam Seidel.

—Staff writer Liyun Jin can be reached at ljin@fas.harvard.edu.