What is the size of the gap? How much revenue do we need?

To continue providing value City services at today's level, the City needs to raise $15.0 million per year by June 30, 2026.

With this funding, the City will be able to continue current staffing in public safety, parks, and recreation, library, land use planning and zoning, enforcement of codes or rules to maintain neighborhood livability, social services that help those in need, municipal court, and other services that provide a general citywide benefit.

Adding in other valued City services, like sheltering programs or increasing staffing and services to meet needs as Salem continues to grow, will require additional funding.

$15 million: Current General Fund Shortfall

The City is anticipating a shortfall in the General Fund of more than $15 million by June 30, 2026. The City will not be able to meet state requirements of adopting a balanced budget without reducing costs (by eliminating programs or services and associated staffing) or increasing revenues prior to the start of the new fiscal year on July 1, 2026.

$9.6 million: Sheltering Programs

The City funded sheltering programs with one-time revenues including State and Federal funds. To continue Salem's micro-shelter village communities and Salem Outreach Services Team, an additional $9.6 million is needed annually when existing funding is exhausted as of June 30, 2024. By June 30, 2025, funding for Salem's Navigation Center is exhausted.

$16.7 million: Maintain Current Standard of Service and Operate New Facilities

The City's population continues to grow. Another $16.7 million increases current services, programs and staffing  to keep pace with new population growth. This would not increase service levels to meet the needs in the community, but would add staff to continue to deliver the current level of service. This level of staffing increase would mean the City could operate the new facilities that are being built as part of the $300 million Safety and Livability Bond, like the new fire station and branch library locations.

We must move to align our services with available funding within the next two years, by June 30, 2024.

Without reducing the services we provide our community or adding to our revenue sources, the City's General Fund will be gone by June 30, 2025. We will not have enough resources to fund services for the following year, or adopt a budget.

If the City is unable to raise money within the next two years, then the CIty will need to reduce services in order to adopt a balanced budget between revenues and expenses.

City Council, in conversation with our community, would provide direction on options for reducing City services. A $15 million reduction to services in the General Fund would be equivalent of decreasing services by 65 police officers, or six fire stations ($2.3 million each), or all park maintenance ($9.3 million) and all the Library services ($6 million).

This graph displays the General Fund Forecast prior to the inclusion of the increased City Operations Fee. Fiscal Year (FY) 2024 budget proposal.

The Salem community does have options to continue current staffing levels and increase services to meet the demand in the community.

Three options have been identified through City Council and staff that could support services in the General Fund:

Increase the City Operations Fee. The City Operations Fee is a separate fee to support City services. In Oregon, more than 50 cities use an operations fee to help pay for city services. The operations fee is based on the type of utility account (a single-family home pays a different rate from an apartment building, for example) and is not based on the property value. The City Operations Fee is charged on the monthly utility bill for each account holder in Salem's city limits. Those who qualify for the Utility Rate Relief Program do not pay this fee. The City Council could consider an increase to this fee to continue to support essential City Services.

Each $1 dollar increase could raise $0.93 million in additional revenue. An increase of $5.50 for residential customers, $4.40 for each multi-family unit, and $26.51 for each industrial, commercial, public, or institutional customer will be included in FY 2024 Proposed Budget. If approved, customers would begin seeing the increase on their August 2023 utility bills. The increase pays for more security at parking structures, more code enforcement response to community complaints (2 more staff), more park rangers (2 more staff), and an expansion of the SOS Team to seven days a week. The Outreach and Livability services (SOS) team responds to areas of concern, helps connect people to resources, and supports removal of accumulated garbage in parks, along roads, and other public spaces. An additional increase is included in the proposed FY 2024 budget to increase by CPI in January, 2025.

Employee-Paid Payroll Tax. An employee-paid payroll tax has been referred to Salem voters.

Local Option Levy. A local option levy is a voter approved additional property tax assessment. A local option levy can be levied for a maximum of five years for operational expenses, or ten years for capital expenses. If Salem voters approved a local option levy, the revenue could be used only for the identified needs. Once the levy expires, voters would then need to be asked to approve a new levy to continue collecting local option taxes for an additional five years.