$2M hike in property taxes eyed.

• Position: LOCAL NEWS

Byline: Nick Kotsopoulos

WORCESTER - City Manager Michael V. O'Brien will include in his fiscal 2011 municipal budget a recommendation to tap into the city's unused tax-levy capacity, raising an additional $2 million in property taxes to help finance a $20 million citywide program for street and sidewalk repairs, according to City Hall sources.

That tax increase would be in addition to the allowable 2.5 percent tax increase the city can levy each year under state law.

Worcester is roughly $12 million under the limit of what it can raise in property taxes under Proposition 2-1/2. That reserve has been built up over the past 15 years when previous city councils chose not to tax to the maximum allowed.

As a result, the City Council is in a position where it can raise taxes in additional to the allowable 2.5 percent increase without having to put a Proposition 2-1/2 override question before the voters.

Mr. O'Brien, who will be unveiling his budget proposal to the council tonight, has been doing individual budget briefings with city councilors.

Sources said the manager wants to address the significant backlog of streets and sidewalks in need of repair because it has long been one of the top priorities repeatedly cited by residents.

Because of budget constraints, the city has been unable to keep up with infrastructure repairs, and as a result, a $37 million backlog has built up for street and sidewalk repairs over the years. In some instances, streets and sidewalks approved for repair in 1999 and 2000 have yet to be funded.

While money is set aside in the municipal budget for street and sidewalk repairs, it barely makes a dent in that backlog.

The $20 million infrastructure reinvestment program will be funded by a combination of new capital borrowings ($17 million) and proceeds ($3 million) from the pending transfer of Worcester Regional Airport from the city to the Massachusetts Port Authority.

In order to finance the $17 million in capital borrowings for the program, a recurring revenue stream of $2 million annually will be needed to pay the...