City efficiencies committee says cutting costs alone won’t help plug deficit

A group of financially-savvy executives tasked with looking at the city’s budget to identify ways to save agreed Friday that the city’s budgetary woes are less about wasteful spending and inefficiencies and are largely due to structural problems outside Salem’s control. 

In discussions during four meetings over the past two weeks, group members concluded that while the city is already stretched thin by chronic understaffing and dwindling resources, it is successfully squeezing more services out of what it does have compared to comparably-sized cities like Eugene. 

However, the committee said that current levels of service are unsustainable without addressing systemic issues like skyrocketing pension costs, the financial burden of being the state’s capital city, and the fact that revenues from property taxes have been frozen by constitutional amendment since the 1990s. 

The committee’s chair, Brian Moore, said the group ultimately concluded the city cannot “efficiency” its way out of its predicament unless those external factors are addressed. 

“I have felt multiple times over this conversation that anything we have recommended as efficiencies feel like bringing a knife to an artillery battle. You might get something done, but in the end there is a massive battle going on around us and my knife isn’t going to do very much,” Moore said during a meeting Friday. “As much as can be learned in a six hour crash course on the city budget, and the probing we can do, we do not find inordinate waste among city staff. The corollary is that this is not to say that opportunities for efficiency don’t exist, but we believe the issue is a system problem, not a people problem.” 

The committee plans to address the Salem City Council on Feb. 24 and to provide some recommendations and questions to consider as the city seeks ways to avoid painful cuts to city services.

Committee members did come up with several suggestions for saving money, which include collaborating with other jurisdictions to avoid redundancy and inefficiency, finding cheaper ways to deliver the same services in certain instances, using artificial intelligence to reduce workloads, reduce overtime as much as possible, and to consider whether granting tax breaks in urban renewal areas is worth foregoing revenue, among others. 

Moore homed in on the fact that 80% of the city’s general fund goes to staffing, and that much of the cost associated with staffing comes from ballooning pension rates which are set by the state. 

The city’s Chief Financial Officer Josh Eggleston told Salem Reporter in November that the city will pay a rate of at least 24% of its payroll into the state retirement system, up from 18% the year before. That’s an extra expense of about $6.6 million this year for the city’s general fund, which faces about a $14 million budget deficit.

“Those kinds of numbers… I don’t know how any organization absorbs that. I just don’t,” Moore said. 

Moore said given the committee’s limited time and scope, and the complex nature of the city’s predicament, the community should not expect the group to have all the answers when it goes before council on Feb. 24.  

“If anybody is looking to this committee to solve that problem in a two week period, unfortunately they will be disappointed,” Moore said. “I hope that whatever we produce for the city council will draw enough attention that people will really try to get to the root of the matter instead of the branches and fruits.” 

Committee member Micael Gay, director of government relations and strategic communications for Salem Health, reminded the group that part of the reason the committee was formed was to provide the community with an honest appraisal of the situation.

“That is the reason we are here, because of this bedrock political perspective that government is wasteful and inefficient and that is part of operating a governmental entity and trying to demonstrate efficiency and doing the most with what you are given,” Gay said. “I think you cannot take your eye off that ball in terms of leading a governmental agency.” 

Bryce Petersen, a local business owner, real estate investor and developer and managing member at Community First Solutions, said one of the committee’s most important questions to answer is whether the city is operating efficiently at a high level. 

“I would say, based on generalities, broadly speaking, I believe the city to be doing more, or the same, services with less than comparable sized cities,” Petersen said. “There has to be efficiencies that are already happening, otherwise we would have no services just based on benchmarking.”

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

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