Honored Guests, Friends, Family, and Fellow Residents:

Good Evening.

And, of course, Happy New Year – because I firmly believe that, despite the challenges that lie before us, this will be a happy, productive and successful year for Somerville and its people.

I know that optimism and confidence are not exactly fashionable these days, but I also know that the recent history of our city gives us every reason to embrace them.

After all, we have faced hard times before – and we have prevailed.

Just five years ago, on another chilly January 5th, I spoke these words in my First Inaugural Address: "We face a fundamental choice – a choice that will shape our city's destiny for decades to come.

"We can hunker down, lower our sights, and just scrape by until times change for the better.

"Or we can build on the tradition of pride and progress that have shaped this city's recent history, and we can act decisively to ensure a more vital and prosperous community for our children and ourselves."

Let the record show that, in 2004 – and in every year since – Somerville chose confident and decisive action. And look what happened:

We not only survived a fiscal crisis, but we emerged stronger than ever, with more resources, more energy and more promise than when we began.

But you don't have to take my word for it.

As other communities saw their credit decline in the current market crisis, Somerville finished the year with its highest bond rating ever!

That is why I can stand before you tonight, just as I did in 2004, to offer a message of confidence and resolve – of hope and of continued progress.

And I can tell you that despite our challenges, the state of our city is strong – because over the past five years, we have proven that, working together, we can meet and master any challenge we are given.

Over the past five years, we have built a record of shared accomplishment that makes us a stronger and better city.

As a result, we possess new assets and advantages that will help us succeed in the challenging times that lie ahead.

Tonight, I want to describe some of those advantages, and some of the ways that we will continue to move forward.

But let me begin by assuring you that I have no intention of sugarcoating our current situation.

Times are hard; businesses are hurting and we face a growing mortgage crisis and a declining job market.

State tax revenues are down, and our leaders on Beacon Hill are looking at cuts in local aid of up to ten percent.

Here in Somerville, that would mean a loss of five million dollars in the current fiscal year – or three percent of our operating budget total.

Healthcare costs continue to rise sharply.

And, while we have made substantial investments in our infrastructure, the need for additional improvements remains urgent.

Money, as always, is tight.

The consensus view of most economists and business leaders – here in Massachusetts and across the nation – is that things may get worse before they get better.

Yet there are also good reasons to remain optimistic.

At the national level, after eight years of appalling neglect and incompetence, we are about to welcome bold and responsible leadership that understands the positive role government can, and must, play in the lives of everyday working people.

President-elect Obama has already declared his intention to provide timely and substantial help to state and local governments through a recovery program that focuses on transportation and infrastructure.

At the state level, Governor Patrick has already signaled that he will work with us to keep our transit and economic development programs moving forward – and he has also shown his willingness to help Somerville and other cities work with the legislature to win greater freedom from the outmoded rules that even now limit our ability to adopt more efficient management practices – and deny us the opportunity to diversify our revenues and ease the crushing burden on our residential property taxpayers.

But the biggest and best reasons for confidence are right here in Somerville.

As we enter 2009, our city is in better fiscal shape, with better infrastructure, better schools, better public safety capabilities and more extensive public services than at any time in its recent history.

We no longer stand in the shadow of larger or richer communities: Somerville has become a model for innovation and best practices, not just in New England but across the nation.

Our shared vision for economic development is working – even in a tight credit market – and Assembly Square continues to fulfill its potential as the most exciting Smart Growth development on the eastern seaboard.

In short, the institutional improvements and infrastructural investments we have already made leave us better able to respond to our current challenges.

And, although the magnitude of the current crisis may be even greater than the one we faced in 2004, our city is greater still, with more and better resources – and a proven record of thriving in adversity.

In the past year alone, we have improved public safety by hiring fourteen new police officers, opening two new neighborhood substations and introducing a community policing model that puts more officers in the areas they are needed most. We have also hired 12 new firefighters and are committed to ordering a new, state-of-the-art rescue apparatus.

We made our city more livable by completing work at Leathers Park, Capuano Field, the Lincoln Park soccer fields and the new Sloane Field House at Trum Field, while also moving ahead on renovations for Albion, Grimmons and Hodgkins-Curtin Parks.

We made major strides on the 23.5 million dollar Somerville Avenue project, which is now 75 percent complete and on-track for its scheduled completion in 2009.We repaved another 21 streets – with another 40 to come in 2009 – while continuing to add bike lanes wherever possible.

In the areas of customer service and civic engagement, we launched the ResiStat program, working with our Aldermen to bring data and policy discussions out of city hall and into the neighborhoods.

Over the course of 2008, we held 33 ResiStat community meetings and produced the City's first-ever Resident Report, with a ward-by-ward analysis of city needs and resources.

In May, we underscored our commitment to making city services more accessible and hassle-free by creating a City Hall Welcome desk staffed by 311 personnel.

We continued our expanded hours at the Central Library.

Throughout the year, we increased the number of children- and family-friendly programs offered by our Recreation and Youth Department.

And, just as 2008 drew to a close, we took major strides in building our case against sharply increased jet noise over Somerville.

We have engaged an experienced law firm to help us develop our legal case, and we are now working to line up neighboring communities to join us in seeking relief from this unacceptable environmental burden.

Of course, one of the hallmarks of our city's commitment to better quality-of-life is our investment in public education. Our School Committee and the entire Somerville Public Schools team have done magnificent work to improve the curriculum, performance and programming in every grade.

In 2008, their hard work was rewarded with an announcement that Somerville High School has been ranked by U.S. News
and World Report in the top six percent of high schools nationwide.

This recognition comes in the same year that Somerville also received a ranking from Colin and Alma Powell's America's Promise Alliance as one of the nation's 100 Best Communities for Young People, a coveted designation given to cities and towns nationwide that have made the well-being of children and youth a top priority.

But by far the most significant accomplishment of 2008 for our public school system came at the beginning of the year.

I am referring, of course, to the successful effort to keep the East Somerville Community School functioning as a separate and viable school community after its building was damaged by fire in December of 2007.

Just last month, we were able to announce the exciting news that we had reached an agreement in principle with the Liberty Mutual Group for a fire damage settlement of 12 million dollars.

That's an extremely favorable agreement – and it gives us the resources to make the East Somerville Community School a cost-effective target for state and federal recovery dollars – but it's only the beginning of the funding we will need to rebuild the school.

I make special mention of our response to the East Somerville Community School fire not only because it was an important achievement in 2008 but because it provides proof that our community understands how to take new challenges in stride.

Even as many other communities face Proposition 2-1/2 overrides or cuts in services and personnel, Somerville found a way to respond to unexpected fiscal pressures without panic or desperation.

Indeed, I think it's fair to say that our city enjoys a growing reputation for responsible stewardship of its fiscal resources – a reputation that was further enhanced in 2008.

As I mentioned earlier, this past year Somerville earned the highest credit rating in the city's history – and we continue to enjoy access to the credit markets on very favorable terms.

We also built up cash reserves that will allow us to create a rainy day fund to help cushion the blow of declining state aid.

As in past years, we showed we know how to find significant savings through better management and use of new technologies.

And nowhere has our success in cost management been more apparent than in the areas of energy policy and communications.

The adoption of a performance contract with the Honeywell Corporation has begun to yield significant savings in our energy costs and, of equal long-term value, a reduction in the size of our carbon footprint.

By 2012, we anticipate that our annual energy bill will be cut by over 20 percent.

The switch of our phone systems from traditional copper lines to a digital system has yielded even faster savings: we have already reduced our annual phone bill by 170 thousand dollars ≠- while improving reliability.

All of these changes have strengthened our bottom line, won the approval of regulatory and bond rating agencies, and earned the respect and attention of other cities and towns looking for better ways to manage their finances.

But it is not through fiscal management alone that we have strengthened our city's ability to move forward in times of austerity.

In the end, the single biggest factor in ensuring our future success – and providing continued property tax relief for struggling homeowners – is well-planned, sustainable economic development. And that is where our record shines brightest.

The Assembly Square project is moving forward with solid private-sector financing, steady progress on site preparation for IKEA and the full backing of the Governor's Growth District Initiative, which brings the promise of priority access to state and federal development dollars.

Work on the Green Line Extension and Assembly Square Orange Line Station remains on track ≠- and we will continue to work with Congressman Capuano, Governor Patrick, EOT Secretary Aloisi and our very supportive state legislative delegation to ensure that the siting and design of any future Green Line Maintenance Facility will not undermine either the future development potential or the livability of the Innerbelt and Brickbottom development districts.

As we look ahead to 2009, economic development and transportation projects will continue to take center stage. Construction will start on Assembly Square Drive in the spring, with IKEA starting foundation work later this coming summer.

In Davis Square, we have identified potential developers interested in building a new hotel on city-controlled property, and we intend to have an agreement in hand and preliminary work under way by the end of this year.

In Union Square, a successful planning and community outreach process has resulted in a broad-based consensus on a new set of zoning regulations.

We have asked the Board of Aldermen to review and approve those rules early in the new year, and then we will turn our attention to a more detailed examination of Union Square's multimodal transportation needs – and its aging water and sewer infrastructure.

As the Obama administration unveils its recovery plan, we will be ready – not only with the infrastructure and transportation elements of the Assembly Square project, but also with urgent, appropriate and well-planned public works projects in Magoun Square, along Broadway in East Somerville, and on Washington Street.

In fact, I met just this afternoon on this topic with Lt. Governor Murray, who has asked me to serve on a special panel charged with developing the state's list of priority recovery projects.

Through the success of this ambitious economic development agenda, we can broaden Somerville's tax base, and take some of the load off of the backs of our residential property taxpayers

At the same time, we will move ahead on a host of quality-of-life projects, large and small.We will continue our efforts to make Somerville greener and healthier; to make our roadways safer for pedestrians, motorists and bicyclists alike; to reduce childhood obesity through the next phase of our nationally acclaimed Shape Up Somerville program; to continue our joint efforts with our state delegation and the Department of Conservation and Recreation to improve our parks and recreational facilities.

But as important as all these programs and projects will be for every one of us, I do not wish to turn this address into yet another checklist of actions taken and actions planned.

Throughout the past five years, we have kept our residents informed about, and engaged in, the development of our goals and programs – and we have sought the guidance and approval of our distinguished Board of Aldermen at every turn.

We will continue do so in 2009 and, if the devil is in the details, we will be seeing a lot of him in the months to come as we discuss our financial, developmental, infrastructural, educational and environmental programs.

Tonight, however, my message is at once much simpler and far greater.

While our city, state and nation face serious economic challenges, we are more than equal to those challenges.

The work that we have already done – and the investments we have already made ≠- give us a sturdy shelter from the current fiscal storm.

And, just as our President-elect's incoming chief of staff observed last month, "This crisis provides the opportunity for us to do things that you could not do before."

That is why, as President of the Massachusetts Mayors Association in 2007 and 2008, I pushed for passage of Governor Patrick's proposals for modest local option taxes on restaurant meals and hotel stays – and why I will continue to work with my fellow municipal officials to help ease the burden on residential property taxpayers in every city and town.
And it is why I will work with the Governor and our supportive legislative delegation to close, once and for all, the 1913 telecommunications tax loophole that denies Somerville sorely needed commercial property tax revenue.