Salem may tax everyone who works in the city limits. Here's how much you would pay

The Salem City Council plans to discuss Monday evening a "Safe Salem" payroll tax to cover gaps in funding for police, fire and homelessness services.

Council will conduct a first reading of an ordinance for the proposed employee payroll tax and vote on whether to conduct a July 10 public hearing on the tax, followed by a second reading of the ordinance for enactment.

If passed, the .814% tax would be imposed on all wages for individuals who work in Salem, regardless of where they live, and could be effective as early as July 1, 2024.

The tax would not be imposed on those earning minimum wage.

How much would residents pay?

City officials said this means the average Salem worker would pay $1.39 per day at a rate of 0.814%. A payroll tax calculator is available at egov.cityofsalem.net/PayrollTaxCalculator/.

What would the money pay for?

The proposed tax would bring in an estimated $27.9 million annually. The funds generated from it could only be used for community safety, which includes police services, fire, emergency medical services, 911 call services, code enforcement and unsheltered services.

Eugene has a similar payroll tax that went into effect in 2021.

Why does the city say it needs the tax?

Faced with a looming budget deficit, the Salem budget committee recommended a city operations fee increase and payroll tax to keep current services, like the navigation center and homeless microshelter villages, open while addressing staffing shortages in the police, fire and code enforcement departments.

City leaders said the funds are crucial due to Oregon's property tax system, which limits the amount of revenue the city can collect.

"Salem is a community in transition," city manager Keith Stahley said in his statement in the city's proposed budget. "Over the past 10 years, Salem’s population has grown by over 20,000 people and our service demands have expanded well beyond this increase."

The city has known for years it would be facing a shortfall. City leaders reduced services and slowed hiring in the years since the 2008 recession to keep general fund services solvent. Before the pandemic, leaders considered putting an employee-paid payroll tax on the May 2020 ballot.

The pandemic put a pause on the payroll push. An influx of federal relief dollars, including American Rescue Plan Act funds, temporarily alleviated budget shortfalls. But with the ARPA funds now spent, the city is looking elsewhere to find the money to keep community safety services funded.

In a report to council, staff said community members have urged the city to fill in gaps when it comes to sheltering and homeless services and to decrease crime.

"The Safe Salem Payroll Tax, combined with the increased City Operations Fee in the fiscal year 2024 budget, will help to close the General Fund deficit, increase community safety services, and put the city on a more sustainable financial path," city chief financial officer Josh Eggleston said the report.

Council approved the operations fee increase early this month, meaning single-family homes will see a $5.50 increase on their August utility bills.

Will voters get a say?

Implementation of the payroll tax was not included in the annual budget and required separate action by council.

Some, including councilors Julie Hoy and Deanna Gwyn, said it should only go forward if passed by voters.

More: What’s on the line as Salem faces $11M budget shortfall? Here are 5 things to know

Councilor Virginia Stapleton said the city would be on a tight deadline to get the tax on the November ballot, educate voters on its importance and enact it before the city hit a budget cliff next year. Allowing council to vote on the tax would get the ball rolling faster, avoiding the shortfall and having to cut services.

The proposed ordinance states that the tax will be referred to Salem voters by July 1, 2031 to decide whether to keep it in place. The tax will terminate on Dec. 31, 2031, unless voters opt to continue it.

More information is available at cityofsalem.net/government/shaping-salem-s-future/safe-salem-2023.

Other agenda items

Other items on Monday's agenda include:

• A resolution setting the parking tax rate for the Downtown Parking District.

• Adoption of the Fiscal Year 2024 City of Salem budget.

• Adoption of the capital improvement plan through Fiscal Year 2028.

• A vote on whether to authorize the city manager to apply for federal grant funding to develop the Salem Vision Zero Plan to reduce traffic deaths and the 20-is-Plenty Program to reduce speeding.

• A cooperative agreement with the Siletz tribe to provide municipal services to the tribe's planned 40-unit affordable housing project at 3390 Blossom Drive NE.

• A public hearing on code amendment to repeal overlay zones in the SCAN neighborhood.

• Adoption of the 2023 Neighborhood Traffic Management Plan.

• An information report on the Downtown On-Street Paid Parking Implementation Plan, which seeks to eliminate free on-street parking in downtown Salem.

• An information report on the city partnering with the University of Oregon’s Sustainable Cities Year Program for the 2023-2024 academic year to advance community priorities, including the implementation of Climate Action Plan strategies, principles of equity, civic engagement, housing production, active transportation and mobility, and furthering the infrastructure bond priorities.

How to participate in the Salem City Council

The meeting is at 6 p.m. It will be held in person at the City Council Chambers at the Salem Civic Center, 555 Liberty St. SE and also can be watched on Comcast Cable CCTV Channel 21 or on the Salem YouTube channel in English/American Sign Language and Spanish.

Those wishing to comment in person can sign up on the rosters at the chamber entrance before the start of the meeting.

Written public comments on agenda items can be emailed by 5 p.m. Monday to cityrecorder@cityofsalem.net. Or preregister between 8 a.m. and 2 p.m. Monday at cityofsalem.net/Pages/Public-Comment-at-Salem-City-Council-Meeting.aspx to speak during the meeting via Zoom.

For questions, comments and news tips, email reporter Whitney Woodworth at wmwoodworth@statesmanjournal.com, call 503-910-6616 or follow on Twitter at @wmwoodworth

This article originally appeared on Salem Statesman Journal: On the agenda: Salem City Council considers employee-paid payroll tax