What are the options?
Two of the options would provide more funding to meet more of our community needs for public safety, parks and the library, and planning and development services to our neighborhoods. Revenues generated by these options would be dedicated to support General Fund services.
A City operating fee is a separate fee to support City services. In Oregon, 50 cities use an operating fee to help pay for city services. The operating fee could be based on the type of building (a single family house could pay a different rate from an apartment building, for example) or be the same for everyone (a flat rate). The operating fee would not be based on the value of the property.
Employee-Paid Payroll Tax
Based on a percent of total wages paid, an employee-paid payroll tax could be paid by all employees in Salem's private and public sectors. By including those in the public sector, the cost of providing service would be shared by those who commute to Salem for work. In Oregon, Lane Transit District (LTD), the Tri-County Metropolitan Transportation District of Oregon (TRIMET), and the State of Oregon use payroll taxes to help cover costs of services. LTD and TRIMET use the employer paid payroll tax method, while the State of Oregon uses a payroll deduction from employee wages. The City of Eugene is looking at both an employee-paid and an employer-paid payroll tax.
One of the options would provide more funding for sidewalks, bicycle facilities, and street maintenance.
Local Gas Tax
This option is a per gallon charge on gas used or purchased locally – in a city or county. In Oregon, 27 cities, two counties and the State use a gas tax to help fund maintenance of sidewalks, bicycle facilities, streets and bridges. A gas tax may not be used for public safety, parks and the library, and planning and development services to our neighborhoods.
Who served on the Task Force?
The 14-member Sustainable Services Revenue Task Force was tasked with identifying revenue options to sustain services that provide for a safe, welcoming and livable community, with a strong and diverse economy, a commitment to natural environment stewardship, and safe, reliable and efficient infrastructure. The group included representatives of:
- Salem City Council and Budget Committee
- Salem 350
- Straub Environmental Learning Center
- Salem Fire Foundation
- Salem Police Foundation
- Marion and Polk Counties Homebuilders Association
- Salem Parks and Recreation Advisory Board
- Oregon Marshallese Community Organization
Our Challenge: Why are we looking at revenue options now?
We are spending more than we are taking in
This year (Jul. 1, 2018 to Jun. 30, 2019), expenses are estimated to be $5.4 million more than the revenues we take into the General Fund to support Police, Fire and emergency medical services, the Library, operating Salem's parks, and supporting Salem's neighborhoods.
Other sources of funding are limited to specific kinds of services and projects. For example, a portion of State-collected gas taxes helps to pay for streets and bridges. Water fees paid by residents, businesses and other local customers help to pay for new drinking water treatment, equipment, and pipes to get the water to your home and business. And, funds from recent voter-approved bonds for a new police station and upgrades to the Salem Public Library are dedicated only to those projects.
Costs of services are increasing
Expenses for our services, which rely on our people, have increased as Salem remains a competitive employer in a robust job market and as the cost of public sector retirement escalates.
Revenues are not keeping pace
Revenues from taxes are disconnected from the growth in our community. As more people move here, and as more property development occurs to support our growing population, the City continues to provide public safety, parks and library, transportation, planning and development services to our neighborhoods. The two primary drivers for more City services, population and development growth, do not generate enough revenue to support the growing needs. This situation we are in has taken time to develop and is rooted in property tax ballot measures of the early 1990s.
Improving community services along the way
We have also continued to fine-tune and improve services to our community and reduce costs, moving some resources to new needs along the way. To be good stewards of the resources entrusted to us, we've been using technology in new ways and changing the ways we provide services, using more energy efficient products, charging for services that make sense, and engaging volunteers and foundations to support community services.
It is not enough. The City's financial health is at risk.
How much we have left after we pay the bills for the year in the City's General Fund, the working capital or rainy day fund, is one way to measure the City's financial health. Without changes to the services we provide our community or our revenue sources, the City's General Fund working capital will be gone by June 30, 2022, and we will not have enough resources to fund these services. We will not be able to continue doing all we do. There are big decisions ahead for our community.