Q: How does the City’s budget work?
A: The budget consists of many funds, including the General Fund, which support core services like public safety, parks, libraries and planning. Revenues come from property taxes, fees and other sources, with strict tracking to ensure expenditures match revenues. There are also restricted funds, which means they can only be used to pay for a specific service. Like any household, the city must live within its means. We are required by state law to have a balanced budget.
Q: What is the General Fund?
A: The General Fund is the primary operating fund, supporting public safety, municipal courts, parks, libraries and internal services. For FY 2025, the General Fund is projected to have total expenditures of $190.6 million. Key cost drivers include personnel expenses for public safety, with police and fire alone accounting for over 59% of the budget.
Q: What is the City of Salem’s budget focused on?
A: The City’s budget is primarily focused on people and our shared priorities. About 80 percent—or 80 cents of every dollar—of the budget funds jobs, which allow us to provide core services like police, fire, parks maintenance and library services.
Q: Why does the City have a budget deficit?
In the 1990s, Oregon tax limitation measures capped property tax revenue. As a result, the
City’s budget has not kept pace with rising costs, and property taxes are no longer enough to support existing programs and services. To keep City services and programs in place, the City needs additional revenue to fund positions to pay the people who perform those services.
Q: What financial challenges does Salem face in the coming years?
A: Expenditures have outpaced revenues for several years, leading to a growing budget gap. Salem's General Fund is forecasted to fall below its required fund balance by FY 2025.
Q: What is being done to address the financial gap?
A: The City is implementing temporary, short-term fixes and considering several longer-term solutions to ensure a balanced budget, including conducting third-party audits to ensure efficient use of funds, passing a supplemental budget to cut vacant positions, and increasing fees for parks, recreation, utilities and operations. The City is also conducting polling and community conversations and gathering feedback about people’s priorities and preferences to help the City make informed decisions about the budget and City services going forward.
Q: How will the budget deficit impact City services?
A: If the City is unable to generate more revenue to close the funding gap, we will need to cut City staff hours or positions, reducing or eliminating services in order to adopt a balanced budget. Reductions in services would be based on the priorities and preferences of our community. Some examples include closing fire stations, reducing the number of police officers, reducing or suspending park maintenance and/or library services.
Q: What is the property tax limit?
A: Oregon's statutory limit on property tax growth (3%) restricts how much revenue Salem can collect. The City of Salem receives only about 27 cents on every dollar collected in property taxes. Despite stable growth, this revenue source is insufficient to keep up with rising costs.
Q: How can I provide feedback or ask questions?
A: Salem residents are encouraged to participate in public meetings and community conversations and share their feedback, preferences and priorities with the City. Inquiries and clarifications can be sent to: media@cityofsalem.net and take our survey to provide feedback on this important issue.
