The city of Salem is facing a staggering $17.7 million deficit in its city budget, prompting urgent calls for budget cuts and a reevaluation of city spending priorities. Funding solutions are being actively discussed as the city scrambles to plan a comeback for the next few years. Among other possibilities, a shutdown of the library is on the line.
Virginia Stapleton, a Salem city councilor, former council president, and active Democratic candidate running against Republican Kevin Mannix for the Oregon Legislature’s House of Representatives District 21 (Salem and Keizer), has seen the deep workings inside the development of Salem’s budget and was able to provide an overview explaining Salem’s budget deficit. Before the 1990s, tax rates were set and based on what the city’s prospective achievements would be for the following year. Yearly property tax rates differed because property taxes fund local government. Previously, the local government could set the property tax rates as needed to meet an ideal revenue. However, this system was not popular among the people of Salem. Oregon ballot measures 5, 50 and 47 worked together to limit the local government’s ability to raise property taxes on residents of Oregon.
The Salem, Oregon Revenue Task Force was established on Dec. 11, 2023 and requested members to bring forth ideas that could increase the city budget’s revenue. On the Revenue Task Force is Willamette's own William Smaldone, the E. J. Whipple professor of history and a long-time active participant in Salem’s political matters, including his time as city council president and his service on Salem's Budget Committee. Smaldone estimates that the deficit within the budget will grow larger and therefore result in a reduction of city services and layoffs of staff working for the city. Outlining the city’s current general fund, he explained that there is about $188 million paying for “police and fire, park maintenance [and] the library. It pays for services that people expect from civilized life.”
Smaldone stated that the general fund services are paid for primarily — but not solely — by property tax revenue, but property tax is no longer a viable method to fill the general fund. Due to this, the city has issued more fees to the people of Salem. Operational fees have increased, but there are only so many charges the city can create before they have exhausted all options.
Looking for a long-term solution to fix the budget deficit, the Revenue Task Force came up with the solution to move towards a progressive income tax in hopes that wealthier people would pay a higher amount of taxes than lower-income residents of Salem. This progressive income tax would need to be voted for by the people of Salem in May of 2025. Smaldone noted that if this tax were to be implemented, there would be a lengthy process to get it set up and functioning.
Currently, the city council is debating the possible closure of the Salem Public Library. However, there are other possible ways for the city to make this money without the shutdown of the library. “You can go to the public and ask for a three to five year levy. You can raise the property tax beyond 3% if the public votes for it to be in place for three to five years. That would be called a ‘Local Option Property Tax Levy,’” said Smaldone. This plan would be taken up with the public next May.
As a part of the levy, the city council would also be asking for the public to agree on the progressive income tax after three to five years of the property tax increase to rid all unnecessary regressive taxes (a set amount of taxes that all people within Salem pay regardless of wealth status). This increase is framed as a tax reform. Because this would not be a flat payroll tax, the tax rates would depend on the taxpayer’s individual income.
What sets the city of Salem apart from other Oregon cities is its nearly 11,000 acres of city property owned by the state. Because of this ownership, these buildings do not contribute any money to the city budget via property taxes. Recently, Oregon has considered paying the Salem city budget a “Payment in Lieu of Taxes,” where these buildings would pay a flat fee. The local delegation within the state assembly is currently working on this plan, which is estimated to bring in $5 million to $6 million.
“If the levy fails in May, you’re gonna have massive cuts,” Stapleton concluded. “I wouldn’t be surprised if the library gets shut down. You’re going to have to cut a fire station or maybe two. … There will be longer response times for EMS.” This decision will ride on the shoulders of the voters of Salem in May 2025. Until then, this plan will be finalized and polished within the city council before its presentation to the public.
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