Today Keith Stahley, Salem's City Manager (basically the CEO of city government), gave a presentation to the Salem City Club about the city's budget problems that led to a decision by the City Council to put a "livability" property tax levy on the May 2025 ballot.
Livability refers to the Library, Center 50+, and Parks/Recreation -- funding for which will be the focus of the levy. I took photos of almost all of Stahley's slide presentation, missing just a couple of slides. I'll use those slides as the basis for this report on what Stahley said.
Keith Stahley, standing at a podium vacated by City Club president Sean Nikas
Stahley started off by saying that this year is special for the City of Salem. We are at a budgetary cliff, a Thelma and Louise moment (for those old enough to remember the 1991 movie). City government faces a $13.81 million deficit. The only options are more revenue or less expense.
The slide above shows how the city is spending its money in Fiscal Year 2025, which runs from July 1, 2024 to June 30, 2025. Police and Fire make up about 60% of the $191 million general fund budget. Community Services, which includes the Library, Center 50+, and Parks/Recreation, comprise about 10% of the budget.
The budgetary woes of the City of Salem aren't unique. Other cities in Oregon are facing similar problems.
About $8 million has been cut from the general fund budget in FY 2024 and 2025.
A Revenue Task Force came up with eight options for bringing more money into the general fund. The highlighted options are the current favorites: Franchise Fee increase for the near-term option; Local Option Property Tax Levy for the medium-term option; Payment in Lieu of Taxes (County, State, Federal) for the Long-Term Option). The latter refers to the fact that government agencies don't pay property taxes, with state government getting out of $7.3 million a year that the City of Salem hopes to obtain from the state legislature.
A poll conducted for the City of Salem found that residents don't favor any tax increase that generates more revenue for city services. A Public Safety levy polled better than a Community Livability levy, which will be on the May ballot.
Stahley said that for the levy to pass, community support will have to be increased through various means: the Mayor and City Council; Unions and City Employees; Boards, Commissions, and Foundations; Community Organizations. He noted that a levy in Gresham started with less than 40% support in February and eventually passed with 64% support in May.
The local option levy was chosen by the City Council in November 2024 to fund the Library, Parks, and Center 50+.
A local option levy is a temporary property tax, usually lasting five years.
The tax rates per $1,000 of property value shown between the horizontal lines are the favored rates for the levy: $.99 to $1.10. The amount remains to be determined. The household impact of the $1.00 rate is $234 per year, which indicates that city officials are assuming an average household property value of $234,000. I assume this is correct, though some Googling revealed that the median sold home price in Salem is about $445,000. However, in Oregon the market value can differ quite a bit from the value used for property taxes.
The livability levy would raise around $14-16 million in FY 2026, while the livability services are budgeted at about $21 million. But as shown in another slide below, the services generate income that markedly reduces the gap between expenses and revenues.
Salem's Library currently is only open 38 hours a week, while the Eugene Library is open 61 hours. Even if the budget cuts made to the Salem Library are restored, it will only be open 53 hours. Much better, but not great. The West Salem branch would go from 10 hours a week to 25 hours.
Once revenues generated by the Library, Center 50+, and Parks/Recreation are included, the net cost of these services in FY 2026 is estimated to be about $15.1 million. So there's only about a $1 million gap between what could be raised by the livability levy and the cost of those services, which Stahley said could be managed fairly easily.
A general fund deficit would still exist, just a much smaller one.
These are some other ways for the City of Salem to raise revenue and cut expenses.
Here's the timeline for the May election. The Library Foundation is going to pay for the $35,000 cost of the election from their funds.
During the Q&A part of the program, Stahley said that the May election was favored for the levy because if it passes, money would begin to be available in November 2025, when property tax statements go out. Asked whether the Chamber of Commerce would support the levy, he said that the Chamber is involved with an efficiency review committee that will look at how city government operates. He's hopeful that the committee will say that the budget is in great shape.
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