Salem city councilors voted down a motion to repeal the city’s new tax on worker wages during Monday’s meeting, meaning Salem voters will decide the issue in November.
The effort to repeal the tax was led by Councilor Julie Hoy. Councilors on both sides of the motion said they were voting in the best interest of rebuilding public trust. Those in favor of the repeal said it would signal that they heard those who spoke against the tax, while those who opted to send it to the November ballot said the community had asked for a chance to weigh in.
The motion failed in a 6-3 vote. Councilors Hoy, Deanna Gwyn and Jose Gonzalez voted in favor of the repeal, while councilors Vanessa Nordyke, Micki Varney, Virginia Stapleton, Linda Nishioka, Trevor Phillips and Mayor Chris Hoy opposed it.
“We did our part, now residents have done their part, and now it’s time for the voters to vote. I think that if we don’t allow that process to play out, I think that that undermines trust, in my mind,” said Mayor Hoy, no relation to Julie Hoy, during the meeting.
On July 10, city councilors approved a city payroll tax of 0.814% of all wages above minimum wage in Salem to fund and expand emergency services and homeless shelter programs in the city. Councilors approved it in a narrow 5-4 vote.
The council’s decision would have started tax collections in July 2024 and would not subject the practice to a public vote for up to seven years.
Within a week of the council’s decision, Oregon Business & Industry, a Salem-based statewide business group, filed a petition to refer the tax to voters in the Nov. 7 election, which earlier this month gathered enough signatures to qualify.
Hoy’s motion sought to pull the issue from the ballot, which she hoped would save the city the $220,000 cost of running the special election.
Last week, Salem Reporter reported that it was unclear if a repeal would prevent the election, and County Clerk Bill Burgess indicated that an election would likely proceed regardless of council action.
Council President Virginia Stapleton, who is leading the “Save Salem Campaign” in support of the tax, said that the referendum was not a surprise, and the city was fully prepared for it.
“I think on the whole when somebody signs a referendum they want a chance to vote on it. And so I really support going to the voters in November to find out what they think,” she said.
Stapleton said the group has begun to ask for donations, and has collected a few from city councilors in favor of the tax and from the campaign’s members. As of Monday, no funds have been published by the Oregon Secretary of state’s campaign finance page, which requires that campaign contributions and expenses are filed within 30 days.
As of Monday, Refer the Tax on Salem Workers, the campaign to put the tax on the ballot, had raised over $134,000 in cash and in-kind contributions, chiefly from the political action committee for Oregon Business & Industry. Other top donors are the Salem Area Chamber of Commerce, with a $20,000 contribution, the conservative group Marion+Polk First with $5,756 in-kind and Salem law firm Sherman Sherman Johnnie & Hoyt, with $5,573 in-kind, according to campaign finance records.
Phillips pointed out that the campaign’s title of “Let Salem Vote,” was indicative of the signers’ support of sending the topic to the November ballot.
He, along with the five councilors who originally passed the tax in July, have said they sought to avoid cuts to Center 50+, the closure of the Salem library’s west branch, limited maintenance of parks, no staffing at an incoming fire station and other anticipated cost-saving impacts if the payroll tax were to fail.
“I’m not okay with the cuts, but if the citizens vote on it and the voters choose that, then we will budget within that constraint. But until that time, I want to say as clearly as possible that I am concerned for our safety without this,” Phillips said Monday.
He added that regardless of the outcome of the payroll tax, Salem will still need to address the state’s revenue cap on property taxes and the loss of tax revenue from being the state capital because a large portion of Salem’s land is tax-exempt. City leaders have said those issues contribute to the deficit the payroll tax seeks to address.
Varney echoed his sentiments, and said that the voters “want to drive the car, and I think we need to give them the keys.” She, like Phillips, said she has heard from residents who supported the petition to refer the tax to voters because they wanted to weigh in, but plan to vote in favor of the tax.
Councilors Gwyn and Gonzalez, who voted in favor of the repeal, said that they saw the referendum as a strong indication of the community rejecting the tax.
Nordyke voted against the repeal, saying that it needs to go to voters, but said she appreciated Hoy’s effort saying that a lot of trouble could have been avoided if the council supported Hoy’s initial July 10 motion to bring it to a public vote.
“The demand by the public to put this on the ballot was a completely foreseeable outcome of this vote and unfortunately, now that it’s going to the ballot, there are some voters who will never vote for this because trust has been irreparably damaged,” Nordyke said. “They will not listen because the council did not listen.”
She said that some people will now not vote for the tax just because the council attempted to impose it.
“It will take years for the city to dig itself out of the hole that it’s created through the way that it’s proceeded with this payroll tax. And people will remember it above all other votes and all other good things that the staff and that city leadership does day in and day out,” she said.
Mayor Hoy said that proceeding with the tax was within the council’s purview, and the referendum was within residents’ purview. He said it’s now time to allow Salemites to make their decisions, and he doesn’t know where the votes will fall.
Contact reporter Abbey McDonald: [email protected] or 503-704-0355.
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Abbey McDonald joined the Salem Reporter in 2022. She previously worked as the business reporter at The Astorian, where she covered labor issues, health care and social services. A University of Oregon grad, she has also reported for the Malheur Enterprise, The News-Review and Willamette Week.