Cherriots board will delay new payroll tax a year as Chamber, others oppose effort
The Salem Area Mass Transit District Board intends to delay imposing a new payroll tax on employers until 2027 and may set a lower rate following significant pushback, according to the board chair.
Cherriots’ seven-person board plans to vote in October to impose the tax to pay for expanded bus service.
The agency’s original plan called for a 0.7% tax on employer payrolls starting in January, which was expected to raise $39 million in its first year. Under state law, the board can impose the tax without a public vote.
The tax rate could be reduced, depending on whether state legislators award more transit funding in a special session.
Cherriots’ original plan prompted an outcry from many business leaders in Salem. The Salem Area Chamber of Commerce announced Thursday that its board voted to oppose the tax.
CEO Tom Hoffert said the chamber believed Cherriots should take the proposal to a public vote or withdraw it altogether.
“While our local business community provides the necessary tax base for government services, the Cherriots board is unilaterally substituting its judgment over the needs and priorities of the entire Salem-Keizer community,” the chamber’s statement said. “Taxing $39 million from local businesses will hurt all employees and families. Every dollar of this employer-paid payroll tax is taken directly from small business budgets and will result in fewer job opportunities, reduced capital investment, higher prices for goods and services and diminished charitable contributions.”
The Cherriots board discussed the changes at an Aug. 14 work session, according to Chair Maria Hinojos Pressey. She said the consideration was due to “community feedback” as well as the possibility of Cherriots receiving more state money from the transportation package legislators are considering.
That new transportation funding would give Cherriots an additional $10 million a year, with about $3 million of that to be disbursed to other regional transit agencies in Woodburn, Monmouth-Independence and Silverton, she said.
Hinojos Pressey said the board still intends to consider imposing a tax without a public vote.
“It is within the legal authority of the Salem Area Mass Transit District Board of Directors,” she said.
The tax proposal has drawn criticism primarily from businesses who say it’s unaffordable in a time of rising prices and when other taxes are growing. The Salem chamber once supported letting Cherriots levy taxes without a public vote as part of a compromise worked out in the legislature years ago. But business leaders say that support was contingent on greater business involvement in the agency’s operations.
Those negotiations came after local voters said no to a Cherriots payroll tax in 2015.
The Keizer City Council voted Aug. 18 to oppose the tax. Conservative political action committee Marion + Polk First has been gathering signatures for a petition showing opposition to the tax. The group was among those that backed a successful effort to defeat a payroll tax the Salem City Council imposed on residents in 2023.
“We are proud of the role we played in referring and defeating the Salem payroll tax with 82% of the vote. We have heard from a number of employers and residents who are very concerned about what this new tax would mean for our community. All options are on the table,” according to an email from Nick Hill, the group’s grassroots coordinator.
It’s not clear under Oregon law whether a transit board action can be subjected to a public vote through the referendum process. That depends on a variety of factors including the district type, how it’s organized and the type of action the board takes, said Tess Seger, spokeswoman for the Oregon Secretary of State’s office.
Cherriots leaders intend to hold public sessions about the tax on Sept. 8, 16, 22 and 30, prior to a board vote, General Manager Allan Pollock said. They’re formatted as open houses with a variety of stations where people can discuss various issues with Cherriots representatives.
“The goal is to gather feedback and also have people complete a survey of their priorities and thoughts,” Pollock said in an email. Details will be discussed at the board’s Thursday meeting.
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Cherriots plans for business tax to increase bus service, build transit stations
Contact reporter Rachel Alexander: [email protected] or 503-575-1241.
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Rachel Alexander is Salem Reporter’s managing editor. She joined Salem Reporter when it was founded in 2018 and covers education, economic development and a little bit of everything else. She’s been a journalist in Oregon and Washington for over a decade and is a past president of Oregon's Society of Professional Journalists chapter. Outside of work, you can often find her gardening or with her nose buried in a book.
