UPDATED: City council raises utility rates, approves $18k pay increase for city manager

On Tuesday, Salem city councilors voted 7-1 to raise city utility rates on households by roughly $5 a month for water, stormwater and sewage, starting in January.

The 4.5% rate increase will take effect in January, raising about $4.5 to $5 million extra in 2025 for the city’s utility fund. The vote means another 4.5% increase in utility rates is set for 2026 as well.

City councilors Vanessa Nordyke, Micki Varney, Virginia Stapleton, Deanna Gwyn, Linda Nishioka, Trevor Phillips and Mayor Chris Hoy voted in favor of the increase, while Councilor Julie Hoy, also the mayor-elect voted against it. 

City Councilor Jose Gonzalez was absent Tuesday.

A split council also voted 5-3 to raise City Manager Keith Stahley’s salary by $18,000 a year. The proposal to do so came from Mayor Chris Hoy.

Nordyke, Stapleton, Nishioka, Phillips and Mayor Hoy voted in favor of a raise for Stahley while councilors Hoy, Gwyn and Varney voted against it, feeling that given the city’s $18 million budget shortfall, it was not a good time to be giving out raises. 

The increase bring’s Stahley’s salary to $270,000 annually. 

The proposal came as Salem faces an $18 million budget deficit. Councilors in October unanimously approved pay increases for most union-represented city employees that will cost the city $25 million over three years.

Hoy said the city manager pay increase was necessary to keep the position competitive relative to other Oregon cities, and to keep the manager’s pay higher than that of his deputies. Hoy said during the council meeting that there is currently one deputy city manager earning a higher salary than Stahley. 

Salem residents could pay more for utilities starting next year – Approved  

Councilors held a public hearing and then voted 7-1 to increase utility costs. The average Salem home will pay about $128 per month for water, sewer and stormwater in 2025, up from the current $123.

Dozens of community members wrote to the council in opposition of the utility rate increase and a couple of community members spoke during public testimony including the president of the Association of Western Pulp and Paper workers Bill Randall. 

“Myself and the taxpayers of Salem are sick and tired of getting nickel and dimed. We really are. And I think the vote to rescind the Salem payroll tax represented that,” Randall said. “This is the reason why I voted to rescind the Salem payroll tax. This will be the reason that I vote no to raise money next year in the city.” 

During the council meeting, most councilors agreed that it is necessary to raise rates to keep up with rising costs and system maintenance. 

“This is never an easy thing to do. Nobody wants to raise these rates. We all pay these rates. The one comment I hear from the public over and over again…is that the government needs to run like a business,” Mayor Hoy said. “For those who think we ought to run like a business, this is the portion of city government that runs like a business. We charge what it costs to provide the service and nothing more…I hate that the cost is going up as much as it is. I don’t like any of the costs going up. But they are and we have to provide the service.” 

Phillips said he believed the rate hike should be even higher than 4.5% to ensure the city can keep up with rising costs and maintenance over time. Julie Hoy was the only vote against the rate hikes. 

“I think it is important for me to say that I believe in what we need. I believe that we need this. I think that the timing of the ask is unfortunate. When trust for the community is at an all time low,” Julie Hoy said. “Because all people deserve representation I will be voting no. Not that I don’t recognize the need. But if we could wait until trust is greater, I think it would be better for the community to understand why we do the things that we do when we do them.” 

The city’s water, wastewater, and stormwater systems need more funding to keep up with community needs and to comply with state and federal regulations, Brian Martin, the city’s public works director, said in a staff report. The consistent annual increases are necessary to both operate and maintain the systems, provide services, and complete important capital projects, Martin said. 

The 4.5% rate increases were recommended by a task force which included city councilors, Marion County Commissioners and representatives from the cities of Keizer and Turner, a representative of the Suburban East Salem Water District, a representative of the Salem Chamber of Commerce and the Strategic Economic Development Corporation, and two community members. 

The task force also recommended approving the allocation of up to $400,000 of utility revenue to help support the 2025 emergency utility assistance program.

City councilors on Tuesday also voted to extend that program to Dec. 31, 2026. The program criteria were broadened in 2020. The resolution authorizes the annual utility revenue funds to go towards assistance for qualified customers beginning next year, but reduces the amount each customer can receive from $500 per year to $350. The program could help about 1,143 people receive assistance in 2025 and 2026.

The utility fund is separate from the city’s general fund, which pays for most general services like public safety, parks and the library. While Salem’s general fund faces an $18 million budget deficit, the utility fund is in good financial shape. 

Salem residents have grown weary of cost increases, indicating in recent city polling that they are unwilling to vote for property tax increases to help pay for city services.

Leading up to the Tuesday council meeting community members sent dozens of public comments in opposition of the utility hikes. 

“It’s all about bleeding us dry of our hard earned income to prop up the city, raise wages for staff who don’t do diddly, and bennies,” Salem resident Cheryl Eby wrote to the city as public comment. “None of the money ever seems to get to where it needs to go, like fixing our decaying roads and sidewalks, or dealing with water storage issues as we had a few years ago…It must stop now.”

City manager’s salary 

Councilors voted 5-3 Tuesday to raise Stahley’s salary by 7.3%. Stahley currently makes $252,000 per year.

In February 2022 the city council set the city manager salary range at $220,000 to $250,000, and Stahley was hired in July of that year at a salary of $240,000, Hoy’s motion said. 

During the meeting, Gwyn asked Mayor Hoy why he was suggesting the pay raise at that time, and Mayor Hoy explained that currently there is a deputy city manager making more money than Stahley. 

“It’s something that has been on my to do list, and I’m running out of meetings,” Mayor Hoy said. “That’s the plain truth.”  

Nordyke pointed out that prior pay raises for unionized city workers and police supervisors which will cost significantly more than $18,000 year were recently approved unanimously and, as far as she is aware, without any pushback.

“I don’t think you are ever going to get a lot of public testimony signing up for this sort of agenda item. You will get people to sign up to testify for fair pay for a lot of our staff,” Nordyke said. “Our unionized employees, our police or fire, our library staff, they all have their supporters who will come and tell you all the reasons why. If we want to stay competitive and not lose these folks that you pay them appropriately. There is no comparable fan club for city managers.” 

Trevor Phillips also voiced his support for the raise and said he believed it was odd to have a deputy city manager making more than the city manager. 

“I think in terms of orders of magnitude this is one one thousandth of the budgetary issue,” Phillips said. “So the amount of money that we are missing this year is $18 million and this is $18,000 per year.” 

Julie Hoy said she would’ve been more comfortable voting in favor of a raise after a performance review of the city manager’s office. 

“You mentioned that it is one one thousandth of the shortfall, but it is 100% of the problem,” Julie Hoy said. “That we are making decisions and bringing things forward without consideration of what the people are saying.” 

In July 2023, Stahley received a 5% cost of living adjustment, which was part of his employment contract, bringing his annual salary to $252,000. Stahley did not receive a pay increase based on merit after his first year, and his one-year performance evaluation was completed by the city council in April of this year. His salary was not increased after Stahley said he did not want to be considered for an increase. 

Prior to the meeting, Chris Hoy told Salem Reporter the salary increase is a regular and necessary order of business but that it comes at less than ideal timing given the city’s nearly $18 million budgetary shortfall for 2025. 

Hoy said the city’s human resources department sets pay scales for all city employees except for the city manager, so adjustments must be made to avoid stagnation and to ensure a salary rate separation between the city manager and those working under him. 

“His salary just ends up being stagnant and eventually people pass him by. So, this is just my attempt to fix that with a minimal increase to make it so he is the highest paid city employee,” Hoy said. “He is the guy with the most responsibility, he is the guy running the whole thing. In my mind he deserves to be paid at that rate.” 

Now that it is approved, the salary increase creates a 5% buffer in pay between the highest paid deputy city manager position and the city manager. Stahley’s new salary is closer to the pay incomparably sized cities like Eugene, where the city manager makes $286,354 a year. 

Other items

• City councilors Tuesday also approved the third amendment to the purchase and sale agreement between the city and Home First Development and Green Light Development for the sale of the former Salem General Hospital site. The amendment allows the buyer to take ownership of the property by early December to avoid the risk of losing state funding for the affordable housing project. 
• Also approved on Tuesday was Mayor Hoy’s proposal for a public censure for City Councilor Julie Hoy, also the mayor-elect, and Councilor Deanna Gwyn after the two chose to recently vote on a land use decision involving a campaign donor.

ORIGINAL STORY:

On Tuesday Salem city councilors will consider raising city utility rates on households by roughly $5 a month for water, stormwater and sewage. 

If approved, the 4.5% rate increase would take effect in January, raising about $4.5 to $5 million extra in 2025 for the city’s utility fund. Another 4.5% increase in utility rates is also proposed for 2026.

Mayor Chris Hoy is also proposing an $18,000 annual salary increase for City Manager Keith Stahley, which would bring his salary to $270,000 annually. 

The proposal comes as Salem faces an $18 million budget deficit. Councilors in October unanimously approved pay increases for most union-represented city employees that will cost the city $25 million over three years.

Hoy said the city manager pay increase increase is necessary to keep the position competitive relative to other Oregon cities, and to keep the manager’s pay higher than that of his deputies.

Salem plans to raise utility costs by about $5 per month starting in January 2025

Salem residents could pay more for utilities starting next year 

Councilors will hold a public hearing and then vote on a utility rate increase. If approved, an average Salem home would pay about $128 per month for water, sewer and stormwater, up from the current $123.

The city’s water, wastewater, and stormwater systems need more funding to keep up with community needs and to comply with state and federal regulations, Brian Martin, the city’s public works director, said in a staff report. The consistent annual increases are necessary to both operate and maintain the systems, provide services, and complete important capital projects, Martin said. 

The 4.5% rate increases were recommended by a task force which included city councilors, Marion County Commissioners and representatives from the cities of Keizer and Turner, a representative of the Suburban East Salem Water District, a representative of the Salem Chamber of Commerce and the Strategic Economic Development Corporation, and two community members. 

The task force also recommended approving the allocation of up to $400,000 of utility revenue to help support the 2025 emergency utility assistance program.

City councilors on Tuesday will also vote on extending that program to Dec. 31, 2026. The program criteria were broadened in 2020. The resolution would authorize the annual utility revenue funds to go towards assistance for qualified customers beginning next year, but reduce the amount each customer can receive from $500 per year to $350. If approved, the program could help about 1,143 people receive assistance in 2025 and 2026.

The utility fund is separate from the city’s general fund, which pays for most general services like public safety, parks and the library. While Salem’s general fund faces an $18 million budget deficit, the utility fund is in good financial shape. 

Salem residents have grown weary of cost increases, indicating in recent city polling that they are unwilling to vote for property tax increases to help pay for city services.

Leading up to the Tuesday council meeting community members sent in about a dozen public comments in opposition of the possible utility hikes. 

“It’s all about bleeding us dry of our hard earned income to prop up the city, raise wages for staff who don’t do diddly, and bennies,” Salem resident Cheryl Eby wrote to the city as public comment. “None of the money ever seems to get to where it needs to go, like fixing our decaying roads and sidewalks, or dealing with water storage issues as we had a few years ago…It must stop now.” 

City manager’s salary 

Councilors will vote on a 7.3% salary increase for Stahley, who currently makes $252,000 per year.

In February 2022 the city council set the city manager salary range at $220,000 to $250,000, and Stahley was hired in July of that year at a salary of $240,000, Hoy’s motion said. 

In July 2023, Stahley received a 5% cost of living adjustment, which was part of his employment contract, bringing his annual salary to $252,000. Stahley did not receive a pay increase based on merit after his first year, and his one-year performance evaluation was completed by the city council in April of this year. His salary was not increased after Stahley said he did not want to be considered for an increase. 

Hoy told Salem Reporter the salary increase is a regular and necessary order of business but that it comes at less than ideal timing given the city’s nearly $18 million budgetary shortfall for 2025. 

Hoy said the city’s human resources department sets pay scales for all city employees except for the city manager, so adjustments must be made to avoid stagnation and to ensure a salary rate separation between the city manager and those working under him. 

“His salary just ends up being stagnant and eventually people pass him by. So, this is just my attempt to fix that with a minimal increase to make it so he is the highest paid city employee,” Hoy said. “He is the guy with the most responsibility, he is the guy running the whole thing. In my mind he deserves to be paid at that rate.” 

If approved, the salary increase would create a 5% buffer in pay between the highest paid deputy city manager position and the city manager. Stahley’s new salary would be about $270,000 annually, the report showed, bringing his salary closer to the salary of the city manager in comparably sized cities like Eugene, where the city manager makes $286,354 a year. 

Other items

• City councilors Tuesday will also vote on the third amendment to the purchase and sale agreement between the city and Home First Development and Green Light Development for the sale of the former Salem General Hospital site. The amendment will allow the buyer to take ownership of the property by early December to avoid the risk of losing state funding for the affordable housing project. 
• Also on Tuesday Mayor Hoy will propose a public censure for City Councilor Julie Hoy, also the mayor-elect, and Councilor Deanna Gwyn after the two chose to recently vote on a land use decision involving a campaign donor. 

Contact reporter Joe Siess: [email protected] or 503-335-7790.

A MOMENT MORE, PLEASE – If you found this story useful, consider subscribing to Salem Reporter if you don’t already. Work such as this, done by local professionals, depends on community support from subscribers. Please take a moment and sign up now – easy and secure: SUBSCRIBE.