Salem City Council moves forward with utility fee, payroll tax for general fund

A new fee on utility bills and a tax on Salem-based workers to help Salem’s strained general fund is moving forward.

The Salem City Council Monday voted to proceed with the two mechanisms, which could generate about $16 million per year to pay for police, firefighters, parks, the library and more.

The proposals, which have been discussed since late last year, emerged after budget forecasts showed Salem needed to raise between $6 to $8 million a year to cover rising expenses, or else start making cuts by 2021.

The new fee — called an operating fee — would charge single-family homes $8 per month, multifamily homes $6.40 and businesses would pay a little more than $38. Those fees are adjusted slightly from previously reported, after a motion led by Tom Andersen amended the fees to charge residences less.

The taxes are not yet finalized. The city would cull less than 1 percent of workers’ hourly wages, with different tax brackets for workers who make more or less than $15 per hour. Workers who make minimum wage would not be taxed.

The council voted 6-2 to direct staff to writing ordinances to be voted into effect by the council. Councilor Brad Nanke was absent, and Councilor Jim Lewis and Mayor Chuck Bennett were opposed.

It could be August when council votes to enact the operating fee, which could then start appearing on monthly bills as early as January 2020, according to the city of Salem.

It’s not yet clear when Salem City Council could vote on a payroll tax ordinance. However, it is enacted by council in the next few months it likely couldn’t go into effect any sooner than Summer 2021, according to the city of Salem.

The council doesn’t appear likely to seek voter approval of either new fee. Lewis proposed such a referral but only the mayor joined him.

Bennett worried about the ramifications if the council didn’t allow voters to have their say. He said it would only take a few thousand residents to petition for a public vote, which could then cause more waiting for the new money.

“If the public is forced to force it to the ballot by collecting votes, it will add a year to the mix,” Bennett said. “If I’m wrong – good. If I’m wrong and nobody refers it, good. I just think it’s a mistake because if they do it will create a worse hole than what we’ve got today.”

Andersen noted voters had their say when they elected the councilors.

“Each one of my campaigns I discussed we needed to find new ways to increase our revenue,” he said. “They trust our judgment to make decisions.”

Councilor Cara Kaser agreed. She said without council action it’s likelier that next fiscal year the city could lay off police, close fire stations, cut library hours or take any other kind of cost-saving measure.

“We were elected to do those hard things and this is one of those hard things,” she said.

Have a tip? Contact reporter Troy Brynelson at 503-575-9930, [email protected] or @TroyWB.