Salem city councilors appear ready to put a measure before voters next May to raise property taxes to avoid sweeping cuts to city programs.
But councilors made clear during a work session on Monday, Aug. 19, that they want a clear signal the community would back such increased taxation before they seek formal approval.
The majority of the council gave City Manager Keith Stahley the green light to plan for polling likely voters on what city services they would be willing to pay for and how much they would be willing to pay.
City officials are hoping to avoid cutting fire and police services as well as other departments.
The city faces a multimillion dollar budgetary shortfall as spending outpaces revenue and demand for city services continues to rise.
But the city’s leaders also are mindful of the message sent by voters last fall. The city’s plan to create a new city income tax was thumped by 82% of Salem voters and likely cost Mayor Chris Hoy his bid for reelection. City councilors say they don’t want a repeat of that loss, which would leave the city with few options besides laying off employees and limiting services.
Stahley on Monday also suggested auditing city finances and a deeper look at the city’s financial forecast. Those would provide transparency for citizens and ensure they have a firm understanding of the city’s budgetary shortfalls, he said.
The council will consider moving forward with its plan to poll and engage the community during its next meeting on Aug. 26.
Stahley told Salem Reporter after the meeting his perception is that while councilors support a tax levy going to voters next May, there is also tension about it in the sense that the city hopes to ensure the community both understands the problem and supports a possible solution.
Councilors agreed engaging the community and adequately communicating the city’s budget situation will be a key element moving forward. The city has calculated that it faces an $8-$13 million gap next year between city expenses and revenues.
Stahley outlined to the council and the public what was at stake if new revenue is not secured in time to balance the budget.
“We are definitely not talking about a reduction in our office supply budget,” Stahley said. “We are talking about things like closing fire stations, reducing our police force, closing a library, reducing library hours, closing Center 50+, reducing our parks maintenance. Every service that is funded by the general fund is going to be impacted going forward.”
Stahley told Salem Reporter that if the budget question is not settled soon, city services will continue to degrade with each coming fiscal year.
“We do have a budget shortfall and because of that our level of service to the community for police, fire, parks, recreation, libraries, general services, is continuing to decline,” Stahley said. “Without an influx of funding at some point that level of service is going to decline more rapidly.”
No councilor Monday contested the gravity of the situation and the need to find a solution.
The Monday night work session follows a months-long endeavor by a city-appointed revenue task force charged with finding ways to generate new revenue.
Last month, that task force presented eight possibilities which included imposing new fees or seeking a property tax increase. Stahley highlighted the potential tax increase as the most viable way to generate the much needed revenue.
Stahley gave councilors three options to consider.
The first option is to put a levy on the May 2025 ballot, and the second and third would place a levy on the November 2025 ballot. The difference between the latter options is one would be for a lower tax increase while the city uses some of its reserves to pay for services.
Stahley told Salem Reporter the last option would be the most risky.
“It is basically like going into your savings account and depleting your savings account down to the point to where it is not even any longer meaningful,” Stahley said.
Stahley said there are significant ramifications and differences for when a levy would go to voters next year.
“If we have the revenue question in May, we would start receiving revenue in November 2025. Our budget starts on July 1 of 2025, so if we had revenue in May, we would preclude having to make significant reductions in our budget,” Stahley said. “If we go to November, and we have a vote and it passes, then we wouldn’t actually receive revenues until November of 2026. So, a full year afterwards. And then we would have to make some serious decisions about how deeply we are going to go into fund balance and our ability to bridge that gap.”
However, if a levy failed in November, Stahley said severe cuts would follow.
On Monday there was a sense among councilors that the city should act sooner rather than later.
“Time is of the essence, and we just don’t have the time,” City Councilor Trevor Phillips said. “And no matter what we do, trying to stretch things out, eventually the wall that we hit is just a draconian cut in lifesaving essential services. So, I am emphatically in favor of being prepared to put something on the ballot in May.”
Others said they felt that a levy should have been on this November’s ballot but Stahley told councilors it is too late for that now.
The city council largely agreed that it will take more time to gain community trust, especially after the payroll tax failure.
The councilors who supported the payroll tax last year despite public outcry said at the time they wanted to prevent such cuts, and felt that the city didn’t have time to pursue another option.
“I’m disappointed we don’t get to go out this November because I think this is going to take many times and it could have been an opportunity for us to fine tune our ask, even if we didn’t get it, so that we would have been set up for a future success in May,” said City Councilor Virginia Stapleton, who led a campaign for the payroll tax.
“I’m nervous that the May one will fail and we will have to come back and fine tune it in November, and at that point, we are really, really hurting,” she said.
City Councilor Jose Gonzalez said he believes nothing can be done about the budget situation if the council fails to gain public support and understanding.
“I am starting to feel déjà vu. We are starting to scare people by saying things about cliffs, and cutting this and that. It didn’t work. It didn’t work last time,” Gonzalez said. “The ideas can’t come from this room. We have to put aside our egos and just forget who we are. We need to listen to the people. We need to get the polls in and make a decision that comes from them.”
Stahley reminded councilors that about 60% of the current adopted budget of $190.6 million is dedicated to public safety. He said this reflects the city’s values.
“As it stands today, we may need to cut between $8 million and $13 million from the budget next year or substantially deplete our fund balance if we don’t have additional revenues to balance the budget,” Stahley said. “Ultimately what gets cut is your decision, is the city council’s decision.”
Previous polling showed that Salemites are less interested in paying more taxes, but would be more willing to fund specific services such as the police and fire departments.
“We have a lot of community members who support most of the services that we provide but they are not necessarily ready to pay more for those services. And that is going to take us to a difficult place, which is at some point we are just going to have to cut something,” Mayor Chris Hoy said. “We are going to have to cut an entire program if we don’t see additional revenue. There is no way around it anymore…so the question is going to be ‘What are the community’s priorities?’”
Contact reporter Joe Siess: [email protected] or 503-335-7790.
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Joe Siess is a reporter for Salem Reporter. Joe joined Salem Reporter in 2024 and primarily covers city and county government but loves surprises. Joe previously reported for the Redmond Spokesman, the Bulletin in Bend, Klamath Falls Herald and News and the Malheur Enterprise. He was born in Independence, MO, where the Oregon Trail officially starts, and grew up in the Kansas City area.
