Bill proposes state pay Salem for use of city services

The Oregon Legislature is considering a bill that would make state agencies pay a fee to compensate the city of Salem for fire, police and emergency medical services.

The proposal would require paying roughly $6 million a year to the city, and could launch as a three-year pilot project this year if approved by lawmakers. Supporters say the payment is needed since Salem misses out on millions in tax revenue from state-owned land even though those agencies rely on city services.

Whitney Woodworth is a reporter for the Statesman Journal and has covered the proposal. She joins us with details.

Note: The following transcript was created by a computer and edited by a volunteer.

Dave Miller:  This is Think Out Loud on OPB. I’m Dave Miller. We start today in Salem. Last month we heard from the city’s mayor, Chris Hoy, about the budget shortfall they are facing. He wanted the state government to kick in some money in return for the services required to keep the capital city running well. Right now, the legislature is considering just such a plan. House Bill 4072, which was put forward by five Salem area lawmakers, would bring roughly $6 million to Salem each year for a three year pilot project. Whitney Woodworth is a reporter for The Statesman Journal. She has been covering the proposal and she joins us with more details. Welcome to the show.

Whitney Woodworth:  Hi, thanks so much for having me.

Miller:  I want to start with the big picture here. Can you remind us just of the scale of the financial problems the city is dealing with right now?

Woodworth:  So right now Salem is facing a budget shortfall. Salem leaders have attributed the $19 million budget deficit the city is facing to a broken property tax system that has failed to cover the cost of the general fund, which pays for fire, police, parks and library services.

Miller:  So what have lawmakers focused on in terms of the role that the state plays in this?

Woodworth:  One of the things that’s compounding these woes is the high amount of state land in Salem. The State does not pay property taxes on this land, but it still receives the same emergency response from the city. When he was testifying in favor of this though, Mayor Chris Hoy said that basically resulted in the loss of $7.5 million a year, and that these emergency services to the state-owned property were effectively subsidized by Salem taxpayers. It accounts for about 8% of land within the city limits and it has $1.65 billion in real market value.

Miller:  Can you explain what the bill that lawmakers are considering would do?

Woodworth:  One of the big champions of this bill has been Representative Tom Anderson who previously served on Salem City Council for eight years. And he said when he was on the Council, he became acutely aware of the budget challenges facing the city. So this bill would make state agencies pay a fee to compensate Salem for the fire, police, and emergency services that they provide. It’s calculated by the number of acres of state-owned land in the city and the total land acreage in the city. So basically it amounts to $5 to $6 million annually.

Miller:  A kind of payment in lieu of taxes. How new is this idea?

Woodworth:  This is not a new idea. Mayor Hoy was even quick to point out that there wasn’t something novel, that it’s very common, especially in capital cities where there are large amounts of state-owned land. He pointed to the city of Olympia Washington, which has a similar program and then other states across the country. Minnesota has something similar as well.

Miller:  The governor was against the payroll tax that failed spectacularly at the ballot, something we can talk more about in just a bit. But has she weighed in on this bill?

Woodworth:  Yes, early on in the year she even, when voicing her opposition to the payroll tax, said she wanted to work with leaders to come up with a solution. So early on, she signaled her support for a program like this, something that would help the City out with those emergency services instead of having to resort to the payroll tax.

Miller:  Is there any organized opposition?

Woodworth:  No. It’s gotten bipartisan support from both Democrats and Republicans who are sponsoring it and who spoke in favor of it. Business groups, residents, government leaders and organizations like the Oregon State Firefighters Association testified in support of it. And so most of the testimony was in favor of the proposal.

Miller:  What have you heard from folks in other cities about what they’re looking at here, in terms of the potential outcome? I guess I’m wondering if what happens with this bill could affect the way other cities or counties think about their own public land?

Woodworth:  And when looking at the Salem deficits, Salem is not the only Oregon city facing a budget deficit. Cities across Oregon are also facing budgetary challenges and they have state- owned lands within their cities. And so the idea of this is to have a pilot program for three years. And if it passed, it could mean that Salem could be getting money starting this year. The pilot program, [would] regularly do check-ins and reports on it to see any issues that arise. And cities can opt into receiving those reports.

And so in the future, if this has a positive outcome and it seems to be running smoothly, there could be more legislation to get other cities involved in it because Salem is not the only city with state-owned land. It does have a high amount, but there are other cities that have a large amount of land and are facing budgetary challenges.

Miller:  Have the folks behind this measure explained why this is being put forward as a pilot project or just a pilot provision?

Woodworth:  Just that it’s new to Salem. And so in its execution, it could have a lot of things to address or figure out. But it also is just simpler to test it in a city that has a high amount of state land. And so it’s seeing if it could be done on a state level before making it legislation.

Miller:  So as you noted at the beginning, city leaders are looking at something like a $19 million shortfall. This would only bring in upwards of $6 million in a year. So that still leaves a sizable hole of $12 or $13 million. What does that mean for the city?

Woodworth:  So basically what it says is that it would help but not solve the city’s budget woes. There’s still gonna be different things that need to be addressed after the failure of their payroll tax in the November election, which would have taxed every worker in Salem making above minimum wage. City leaders made it clear that the problem would not be going away. So it started working right away in trying to address it.

They’re taking a two-pronged approach, creating a revenue task force to explore new options for revenue. They are meeting fairly regularly and they’re gonna come back in July with findings for the city. And the city could choose to take action on it. But they’re looking at options like increasing the operations fee of public safety or revisiting the payroll tax.

And then they’re also having some interim budget meetings to discuss budget cuts. In the past, city leaders could set these. Future cuts could include eliminating almost all of our homelessness services which are relatively new to the city, cutting police positions, closing fire stations, shutting down the city’s splash pads [public fountains], park features, and even more cuts to the library.

Miller:  Even more cuts to the library. I mean, what has already been cut?

Woodworth:  Yes, residents have already been feeling the impact of these budget problems. Starting in January, the city drastically reduced the library hours to match their staffing levels. They’ve basically been operating with reduced staffing in recent months. And with no new funding on the horizon, they made the decision to match the operating hours to their level of staffing.

And then earlier this month, Council also voted to eliminate 33 vacant positions, knowing that it’s better to eliminate these from the budget than to keep trying to hire for them and maybe have to cut positions in the future.

Miller:  Among the public services that you mentioned that might be on the chopping block are services for people experiencing homelessness. My understanding is that includes the new Navigation Center that’s only been operating for not that long. How do folks in Salem feel about that?

Woodworth:  Folks are very concerned. Homelessness is repeatedly, when we do surveys of residents, the number one issue that people are concerned about. These are new services. The Navigation Center low barrier shelters have already been showing a lot of impact and a lot of success stories. So that is a big concern and probably one of the biggest concerns among residents and city leaders.

Miller:  You mentioned that the folks who have come together to talk about how to increase revenue are talking about different things including increased or new operations fees and talking about maybe revisiting the payroll tax. Our listeners may remember that it was trounced at the ballot. Voters were given a chance to weigh in on it and they did weigh in. And they said, “Absolutely not.” Do you get the sense that voters have changed their minds in any significant way? It hasn’t been that long since they yelled, “No.”

Woodworth:  I get the impression that the need has definitely increased.  Awareness of the need in the community has definitely increased. People are seeing these budget impacts now. Maybe a more focused payroll tax, something that could continue to only fund a certain number of police positions, a certain number of fire positions, and these homelessness services that might have more success. But that’s just one of the options on the table. And I don’t see anybody trying to revisit the exact same format at the polls, based on how much it was defeated.

Miller:  Whitney, thanks very much.

Woodworth:  Thanks so much for having me.

Miller:  Whitney Woodworth is a reporter for The Statesman Journal.

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