By Joseph A. Curtatone

(The opinions and views expressed in the commentaries of The Somerville News belong solely to the authors of those commentaries and do not reflect the views or opinions of The Somerville News, its staff or publishers.)

The National Conference of Mayors has just come out with a fairly gloomy study of the consequences of unregulated sub-prime lending and the steady deflation of the housing bubble. The decline in home values, the rise in foreclosures and the tightening of consumer credit will, according to this study, all hit hard at local property taxes, as businesses cut back on expansion, the demand for new homes declines, and the value of our property tax base suffers accordingly.

To make the situation even more unsettled, the Commonwealth’s preliminary revenue forecasts suggest an exceptionally tight year at the state level, so I don’t think we can hope for any increases in local aid – in fact, we may see a modest decline.

In the meantime, costs for health care, energy and construction materials are continuing to rise steeply. For communities that have had to get by on Prop 2? overrides, cutbacks and layoffs, all of this news is pretty grim.

It would be a big help if the Legislature would pass Governor Patrick’s Municipal Partnership Act, which would close a pointless and costly telecommunications property tax loophole that costs Somerville $800,000 a year. The Governor’s proposal would also give cities and towns the option to add a modest point or two to the meals and hotel taxes.

But even if nothing new happens on the local aid or local option tax fronts, Somerville should weather the current fiscal situation in relatively good shape. For one thing, we have quite a lot of tax-base enhancing development in the pipeline, especially at Assembly Square. For another thing, we have learned in the past year that Cambridge property values actually went up, and spill-over demand for housing in the Tufts-Harvard-MIT-downtown Boston area means that property values in Somerville will remain fairly stable, declining neither as fast nor as far as in some other areas of the state.

One of the biggest factors in our favor, however, is that we have learned to do more with less: the implementation of the SomerStat analytical system and a results-oriented, performance-based budget process have put us in the position of spending fewer tax dollars per capita on municipal government than any city in the Commonwealth with a population of 30,000 or more. (In fact, our FY2007 budget grew by less than 3 percent over FY2006, an increase that was slightly below the rate of inflation.)

There are some spending areas where we just can’t scrimp: police reorganization will not be cheap, and we’ll have to spend money in the short term on facilities upgrades in order to save in the long term through reduced energy costs. But we have significantly improved our financial position by creating a capital stabilization fund, and by implementing what Moody’s Investors Service calls “conservative budgeting . . . and strong financial management.”

Frankly, I think the nation as a whole may be headed toward a period of genuine financial turbulence, and all of us will feel the effects. It doesn‚Äôt help that our national government has cut taxes for the wealthiest Americans while running up huge bills for the war in Iraq.  It doesn‚Äôt help that the financial regulators at the Federal Reserve and elsewhere have been asleep at the switch while too many Americans ran up big debts financed by borrowing on inflated home prices. It doesn‚Äôt help that years of deferred maintenance on our basic infrastructure ‚Äì highways, bridges, transit, energy systems, water and more ‚Äì have undercut our economic competitiveness and quality of life.

But I think that Somerville is in a strong position to maintain growth and stability even in the face of a national economic malaise. Thanks to Governor Patrick, Congressman Capuano, Federal Realty Investment Trust and IKEA, the necessary money is in place to fund the transit improvements that will support the redevelopment of Assembly Square and the revitalization of Union Square. Thanks to an outstanding superintendent and an innovative School Board, our schools continue to improve, and to produce increasing numbers of graduates with the skills required by a sophisticated, high-value economy.  Thanks to the growth we‚Äôve already seen in the local economy, we are likely to see at least two new hotels in Somerville over the next five years, each of which will add significantly to our commercial property tax revenues and local business climate.

It won’t be easy – it’s never easy – but, no matter what happens to the national economy, we have
the tools to keep Somerville moving ahead over the next decade.