Last month, the Salem Reporter revealed that the city’s police chief, Trevor Womack, wants to hire 15 additional police officers and launch a new community policing program. As of early May, the department is facing nearly two dozen vacancies and has shifted resources in recent years in response to reduced staffing levels. City leaders are proposing to fund the new positions by raising monthly utility fees and adding a new payroll tax which would cost workers an average of $42 a month.The city council is considering bypassing voters to implement the payroll tax which would also be used to fund emergency services and help balance the city’s budget amid declining revenues. The city council must approve a new budget by July 1. Abbey McDonald covers the city for the Salem Reporter. She joins us to talk about her reporting on this issue.
The following transcript was created by a computer and edited by a volunteer:
Dave Miller: From the Gert Boyle studio at OPB, this is Think Out Loud. I’m Dave Miller. The city of Salem is facing a budget crisis. Officials there say they won’t have enough money in two years to fund services. Their solution is to increase fees and institute a possible payroll tax. The increase in revenue wouldn’t just pay for current service levels, it would add 15 new police officer positions as well. Abbey McDonald has been writing all about this for the Salem Reporter. She joins us now. Welcome back to Think Out Loud.
Abbey McDonald: Thanks for having me.
Miller: I want to start with the big picture. What is expected to happen if the city does not raise new revenue?
McDonald: So with spending outpacing revenue, the city is facing a $17 million deficit by 2025. If that happens, there will be no funds to cover payroll on existing services. think emergency services, public works. Other cities in the state are notably facing similar issues, including Eugene, Bend, and Hillsboro.
Miller: What’s the reason for this looming shortfall in Salem?
McDonald: There’s a couple of reasons. The city has been pointing to rising costs from inflation and a growing population, but says that the major structural issue lies in a stagnant property tax. Revenue from property tax was capped at 3% in the 1990s, and therefore has not been able to generate sufficient revenue along with inflation. So this year for instance, property tax revenue, which used to cover 100% of emergency services, can now only cover 81% of it.
Miller: Why did the city settle on a payroll tax and higher fees as the funding mechanism going forward?
McDonald: The payroll tax has been kicked around in Salem for a long time. It got the closest to happening in 2020, it was about to go to voters, but then was pulled from the ballot due to the pressures of the pandemic and not wanting to put that on households. City leadership, especially the city manager and chief financial officer, have said that the pay payroll tax would tap into a new population of revenue source, and they hope that would spread the financial burden to commuters instead of just on residents. The payroll tax would apply to anyone who works in Salem, but there are still some finer details to be hammered out. Right now, the goal I believe is to also net people who are self-employed and remote workers.
Miller: And then there are the higher fees as well?
McDonald: Yes, the increase for the city operations fee which the council approved on Monday will be around five additional dollars per month per household, and that shows up on people’s utility bills. The operations fee was already increased twice in recent years, and it pays for essential city services
Miller: A few months ago, the city came up with a few different tiers of potential payroll, a new payroll tax, which would fund different levels of city services. Where did they land?
McDonald: At the base level, the city was planning to sustain and expand the services of police, fire, and fix airport security, which is an incoming expense. And then the later tiers, the next two tiers, that would be an increase in the rate. They were planning to add on the funding for a newly built homeless navigation center, and the city’s micro shelter program that it invested in a few years ago. Right now, the city is opting for the highest tier of the tax, which would fully fund the homeless service’s sustained operation. But they also opted to increase that rate further in order to spare minimum wage workers from paying the payroll tax.
Miller: Meaning having higher earners paying more so that people making the least would be exempted from the tax?
McDonald: Correct, it only starts taxing the wage above minimum wage.
Miller: What would this mean for the average resident or business owner? How much more would the average Salemite be expected to pay?
McDonald: According to some numbers earlier in the year, the average Salem resident makes about $29.90 an hour. That person would pay an additional $42 a month, or $506 a year. Businesses would be taxed with collecting the payroll tax for the city, which some have said would be an increased time investment. In the coming month, I am expecting details to be better hammered out about what this will look like for businesses.
Miller: Can you describe the debate at the city level about whether the council should just pass this payroll tax, which I understand is within their authority, or ask voters to approve it?
McDonald: When the payroll tax was first introduced, I was pretty sure that it was gonna go to voters, that’s how people were talking. But I believe as the budget committee meetings went on these past two months, the committee decided that the situation is dire enough that they might just need to pass it on their own. So at the last budget committee meeting in May, councilors were still torn on this issue.
Those in favor of not taking it to voters said the city is in a precarious position, funding is necessary whether or not the voters approve of it and time is running out. But those opposed say that households have been dealing with the same increased financial burden that the city has, but on the individual level, and it’s not fair to take it without asking.
Miller: But at this point, it seems that they do it themselves, don’t send it to voters, that side has won the argument?
McDonald: That’s what was written up in the draft ordinance so far. That hasn’t been addressed in council. But that is the draft that they’re working with at this point, and will be having a public hearing on.
Miller: Well, it seems like the reason for that argument is a fear, if I understand it correctly, that Salem residents and voters wouldn’t pass the tax. What have you heard from residents about this possible new tax?
McDonald: Earlier this week, I actually put out an ask in our newsletter and asked Salemites to give their opinions. Things were pretty evenly split in three categories. The first being people who call it an outrage. Someone sent me an email and it just said “Nope.” No subject line. The people who are not fans of it are pointing to current unfilled vacancies in the police department, or just the financial burdens they’re facing at home.
Second category would be people who support the tax but would have liked to have voted for it and feel like they contributed to the conversation.
And then the third category are people who fully endorse the move and say that they elected the counselors to make these kinds of tough decisions on their behalf, and that the services it funds are necessary.
Miller: As I noted at the beginning, the new funding that the city council could approve in terms of a new payroll tax wouldn’t just go towards maintaining current levels of service. A big chunk of it would go towards new programs, in particular, a lot of it would go to new police positions, a dozen or so more police officers who would be a part of a new community policing program. What does that mean? What would this program look like?
McDonald: The community policing program would get $2 million from the payroll tax, and policing in general would get $10.5 million. So the community policing program, when I spoke to the police chief, said that he’s envisioning a small team downtown on bikes that would interact with business owners and residents, and try to do more preventative ground work, because at this point the department has been mainly doing emergency calls due to what he says are staffing issues.
Miller: Staffing issues, which we can turn to in just a second. But you pointed out in a recent article that the Salem population increased by just 14% between 2012 and 2022, but the police department’s general fund costs increased by 53% over the same period. And now, obviously they’re asking for more money. How did the police chief, Trevor Womack, justify that?
McDonald: He said the department’s budget growth has not kept pace with increased expenses during that time. I also checked with the city’s chief financial officer who said that those expenses have been mainly inflation related, but then also increased costs of wages which they’ve raised to try to boost retainment, and then retirement costs and vehicle costs.
Miller: This gets to the question of current staffing. The chief is looking to increase the number of positions when there are more than 20 vacancies to start with. What’s the reason for those vacancies?
McDonald: About half of them, nine, are from vacancies for positions that were added in recent budget cycles that remain unfilled. The police chief said that having understaffing makes it difficult to recruit in the first place, both for incentives, how many hours people have to work, and at the paperwork level of processing applications. He also said there’s been retainment issues and a lower interest in the career. Chief Womack said that the vacancies are a temporary issue and he expects them to last two or three years. But when he was asked a few times during the budget meetings what would happen if they remained unfilled, he just said that they’ll be filled.
Miller: Like a lot of cities around the country, including Portland, Salem saw an increase in the rate of violent crime in recent years. How did the chief explain what’s happening locally?
McDonald: In Salem, the city’s violent crime rate has gone up 42% from 2008, mainly led by an increase in assaults. This has been an increasing trend for the last decade. But when the data came out in March, the police chief said violent crime is something that swings wildly from year to year, and he didn’t specify a cause. But he did say the department’s been putting more resources toward violent crime response.
Miller: We’ve been focusing on police because they would be slated to get a big chunk of this new revenue. But the fire department would get more staff too, right?
McDonald: Yes. The increased operations fee on utility bills, the thing that was passed on Monday, about $5 a month, that’s gonna fund three positions at the Salem Municipal Airport. Those are new positions that fill a federal requirement for the city school to launch commercial air service in the coming months. And then the payroll tax, if it’s passed, will fund 14 firefighters. The fire chief said that the department has been unable to meet the demands of the growing population. So for instance, about one in three 911 callers had to wait more than 5.5 minutes for help to come, which is not meeting standards for care for things like strokes or heart attacks. And then the department has seen an 87% increase in emergency calls in the past decade.
Miller: What would they do with the extra positions?
McDonald: He said the extra positions would decrease burnout, and help them better answer the calls people are having for help. But mainly, the positions would staff a yet to be built fire station. That’s gonna be built with some bond funding that was passed in November by voters. And the chief said during one of the meetings that he doesn’t want the city to make the same mistake that it made in 2006 of building a new fire station and having no money to keep it running.
Miller: That actually reminds me of the questions surrounding the navigation center. It’s been a little while since we’ve talked about this. Can you remind us what it’s supposed to do?
McDonald: People might have heard about that in Portland, I know it’s been in the news in a lot of places. The navigation center is a newly built 75 bed shelter that has in-house mental health treatment and connection to housing stability tools. Its goal is for residents to graduate into more stable housing and have the knowledge to sustain social services and employment for the long term.
Miller: And this has cost the city millions of dollars that it cobbled together to get up and running. But what’s supposed to happen after the first two years of operations are over? What’s the plan for funding it going forward?
McDonald: It was first built with $15.5 million of one time funds, including COVID relief funds. But if the city does not either secure funding through the payroll tax or through its state legislators, it’s not going to support the continued operation of the center. I spoke with the city manager Keith Stahley about this, and he said that he considers homeless services an outlier fund that the city invested in recently, and it’s something that he thinks the state or the county should have done first rather than the city. If the city doesn’t secure the funding, the center could close.
Miller: But would funding for the center be included in the payroll tax that the city could take up soon?
McDonald: Yes, in the most recent draft, the navigation center and micro shelters are both included.
Miller: What’s the next step in terms of the city’s decision making?
McDonald: The city has to pass its annual budget by July 1st. It’s probably gonna pass that during a June 26th meeting. And then on July 10th, the council will be holding a public meeting about the payroll tax to hear from its constituents.
Miller: And then am I right that assuming they do pass this payroll tax, there has to be a citizen vote on it at some point in the next decade?
McDonald: To my understanding, that’s how it’s worked. They have a sunset clause in it that I believe is in six or seven years that they would bring it to voters. Something similar happened in Eugene when they implemented a payroll tax.
Miller: Abbey McDonald, thanks very much.
McDonald: Thank you.
Miller: Abbey McDonald reports on the city of Salem for the Salem Reporter. She joined us to talk about the city’s current budget crisis and plans to increase revenue through a new payroll tax.
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