Timeline: How Salem’s city government got to its current budget crisis
This month, voters in Salem will decide whether to support or reject the city’s proposed new property tax as the city faces deep cuts to the Salem Public Library, in parks, at Center 50+ and across city services.
The levy is the latest attempt by the city to balance its budget, after years of cuts, studies and other efforts to raise revenue. Spending has outpaced revenue due to measures in the 1990s which limited how much the city could bring in property taxes, and as state-mandated pension payments increase.
Salem Reporter has put together a timeline of the city’s work on the budget, and asks to residents, over the last seven years.
2018
September: The Salem City Council creates the Sustainable Services Revenue Task Force to look for ways to bring in money, in order to prevent cuts to services as costs escalate at a higher rate than revenue.
2019
April: The task force shares its top suggestions. Among them is that the city tax a percentage of employee wages to go toward city services. They rated the implementation of the tax as difficult, saying passing it would require clear communication with the community about the needs and use of the money.
August: The city council votes to put the payroll tax before voters in the May 2020 election.
September: Following a recommendation from the revenue task force, the city council votes 6-3 to add an operations fee to bring in revenue for the city’s general fund, which includes police, the library, parks and recreation and city services. It charged households $8 a month on their utility bills to raise $7 million.
2020
February: The new city operations fee begins appearing on bills for Salem households.
March: Due to the financial strain on households from the Covid pandemic, the city council votes unanimously to remove the payroll tax from the May election.
June: City councilors approve a budget calling for $662.5 million in spending and adding 43 new city positions.
2021 & 2022
The city receives over $34 million in pandemic relief, one-time funding from the federal government. The city used most of it to bridge its budget gaps from lost revenue during the pandemic, including overtime pay in the police and fire departments. The money also went toward startup costs for the Navigation Center and micro shelters to serve Salem’s homeless population.
June 2021: City councilors approve a budget with $674.9 million in spending.
May 2022: City leaders warn that once the Covid relief runs out, the city will be in danger of deep cuts if it doesn’t find alternative revenue options.
2023
January: Chief Financial Officer Josh Eggleston presents the city’s 5-year budget forecast to the city’s budget committee. He tells city officials that with spending outpacing revenue, the city’s reserves would run out by 2028 without more money coming in. Former city manager Keith Stahley warns that cuts to services would be likely.
The city moves forward with plans to implement a payroll tax on wage earners to pay for police, fire and some homeless services. The proposed tax rate comes out to an average of $42.19 a month for someone who makes $29.90 an hour, which is the average wage for Salem workers. Minimum wage workers would not be taxed, according to the plan. It would bring an estimated $27.9 million per year for city services.
May: Salem’s police and fire chiefs put their support behind payroll tax, saying it’s needed to improve response times in emergencies. City officials warn the yet-to-open navigation center funded by the Covid relief could close by 2025 without the tax.
June: As the city council appears ready to vote to implement the payroll tax, Salem area business leaders voice opposition to the move. They include The Salem Area Chamber of commerce and Oregon Business & Industry, the statewide chamber of commerce.
The city council approves an increase to the monthly operations fee added to utility bills. Houses began paying $5.50 more per month July 1, with another increase in January 2024.
July: The city council votes narrowly, 5-4, to implement the payroll tax without taking it to voters first. The council vote took place after hours of public testimony opposed to the tax. Salem Reporter later asked councilors to explain their decision. Those in favor of the tax said they felt the cuts ahead without it would be unacceptable.
Within the week, Oregon Business & Industry files a petition to seek a referendum on the payroll tax to force the city to bring the issue to voters.
August: After the petition collects thousands of signatures, county officials announce that the payroll tax is headed to the November 2023 ballot.
Councilors, including former Salem City Council President Virginia Stapleton, Planning Commissioner Michael Slater, and future councilor Irvin Brown launch a campaign to promote the payroll tax.
Councilor Julie Hoy, who would later be voted mayor, asks the city council to remove the tax from the ballot. The measure fails in a 6-3 vote, with the majority opinion citing the effort that already went into bringing it to voters.
September: City Manager Keith Stahley releases his budget framework for the next five years if the tax fails, including reduced hours and layoffs at the Salem Public Library, the closure of the West Salem branch and cuts that would bring more trash to city parks and slower response times for emergency services. In subsequent city council discussion, former councilor Trevor Phillips describes the options ahead as “a smorgasbord of awful.”
Salem Reporter asks members of the budget committee to weigh in. Though many supported the tax, few considered it a perfect solution.
October: Salem Reporter hosts a town hall where the community asks questions about the tax and city budget directly to Stapleton and Preston Mann, political affairs director for Oregon Business & Industry.
Discussions about cuts continue at Salem City Hall. Councilors showed little interest in extreme alternative scenarios that were discussed as hypotheticals, including closing the library entirely. They show support for cutting more vacant positions.
November: 82% of Salem voters reject the city’s payroll tax. Councilors say it’s time for cuts to services, and that they’ll continue to seek a different revenue option.
Salem legislators indicate they’ll again seek money from the state to make up for the cost of hosting state buildings that don’t pay city taxes.
Julie Hoy announces that she will run against incumbent Chris Hoy, no relation, for mayor, largely over his support for imposing a payroll tax without taking it to voters.
2024
January: The Salem public library’s main branch closes on Sundays and cuts evening hours during the week. The West Salem Branch is cut to two open days a week. The library cuts a 50-year library program bringing books and movies to homebound seniors.
The city council approves a new revenue task force which includes business owners, former city councilors and state employees. They have their first meeting at the end of the month.
February: Rep. Tom Andersen, a Salem Democrat, introduces a bill asking the state to pay Salem about $5 million per year for the cost of being the state capital. The bill fails to advance.
The Salem City Council cuts 33 vacant city jobs, saving $4.7 million in the budget for the year. Most had been recently added in the hope that they’d be paid for by the failed payroll tax.
March: False claims that the city planned to close the library within months, based on a hypothetical the council reviewed as an exercise and promptly dismissed in the fall, brings a flurry of testimony in support of the library to council chambers. The city clarifies that deep cuts are on the table for that year but closure is not. Three librarians and over a dozen library workers are set to lose their jobs in July.
April: The budget committee unanimously approves Mayor Chris Hoy’s proposal to tap around $1.2 million saved from the city’s hotel tax to fund the at-risk library jobs for one year, keep the West Salem Branch open and maintain programs. Hoy said the measure is meant as a stopgap while the city’s revenue task force seeks alternate ways to bring in money to fund city services sustainably.
Community members rally in support of the library. Leaders in the city’s Parks and Recreation Department move to cut Movies in the Park, Kids Relays and First Friday concerts series.
May: The Salem City Budget committee votes to use roughly $518,000 from the city’s cultural and tourism fund to be used to prevent further cuts for the year. The move kept splash pads, bathrooms and water fountains maintained and operational over the, and continued programs like the Salem Kids Relays, and movies and concerts in Riverfront Park. They also use $91,5000 from the city’s savings to keep a graffiti abatement position at the Salem Police department.
Julie Hoy wins the mayoral election against incumbent Chris Hoy.
June: The Salem City Council moves forward with a final budget which cuts funding to micro shelter sites housing 232 people, including families, in the community that were opened using the Covid relief funds. Those sites are later saved from closure by state funds.
Center 50+ loses hours, and parks and recreation sees cuts to its staff for maintenance. It mitigates some of the blow by increasing usage fees.
The city’s revenue task force recommends that the city cover its costs by raising property taxes through a levy, either specifically for the library, parks, recreation and Center 50+ or for police and fire. They also recommend that the city implement a personal income tax for people who file their taxes within the city of Salem, indicating that they wanted higher earners to pay more into it.
August: Library advocates ask the city to find a stable source of revenue for the library.
October: City polling of likely voters finds that most Salem residents are unwilling pay more in property taxes to avoid cuts to the library, parks or emergency services. Salem faces a forecasted $18 million budget shortfall in the next year, which is expected to increase every year. Much of the gap is due to a large increase of millions in the amount Salem must pay into the state’s retirement system next year.
Salem police cut their downtown and behavioral health teams.
November: The city council votes to raise utility rates on households by roughly $5 a month starting in January 2025. They also vote to raise City Manager Keith Stahley’s salary by $18,000 a year.
Despite poor polling, councilors begin to move forward and study a possible property tax levy to fund the library, parks and Center 50+.
2025
January: An updated financial forecast shows that the city’s budget deficit for the year is $13.8 million, not $18 million, meaning the city will have slightly more flexibility in the coming year. Councilors indicate they’ll likely pursue a new property tax levy.
After a failure last year, Rep. Tom Andersen puts forward another bill asking the state to pay Salem $7 million to make up for the costs of hosting untaxed state property.
The city operations fee on utility bills rises to $15.88 per month for households.
February: A committee of financially-savvy executives tasked with looking at the city’s budget to find waste release their findings: the city’s budgetary woes are less about wasteful spending and inefficiencies and are largely due to structural problems outside Salem’s control.
The city council moves to put a levy on the ballot to fund the library, parks and Center 50+. They chose the lower of two presented options, which would cost the average Salem homeowner about $229 a year. It would raise a projected $14 million in 2026, enough to address the $13.8 million budget shortfall in the next year.
The council vote to add it to the May 2024 ballot is unanimous.
March: The Salem police department cuts its community academy program, saving about $20,000 in overtime costs.
April: City leaders release their budget proposal for the year, with deep cuts to city services including 51 full time city jobs. It includes cutting library staff by 23, closing the West Salem branch and cutting the main branch to 20 hours per week.
The Salem Area Chamber of Commerce issues its endorsement of the levy. Gov. Tina Kotek says she supports the effort. Salem Reporter hosts a town hall inviting community members to ask city leadership about the levy.
May: Voters will decide the fate of Salem’s proposed levy.
Contact reporter Abbey McDonald: [email protected] or 503-575-1251.
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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.
