Salem, Ore. — On Wednesday evening, October 30, 2024, the City of Salem presented a preliminary five-year financial forecast for the general fund to the City’s Budget Committee.
The forecast is a planning tool to help the City Council and Budget Committee understand future financial trends to inform decision-making about service delivery to the community. The forecast models expected revenues and expenditures for a five-year period for current City services provided by employees to improve our residents’ quality of life.
Key Findings:
Results of the forecast show an estimated $17.7 million budget shortfall expected for the upcoming Fiscal Year 2026 budget that increases in each of the next four years. This increase is largely due to inflationary pressures reflecting cost increases across our economy, including employee salaries, retirement, benefits, and other ongoing expenses.
“The forecast shows a difficult financial path ahead for Salem’s General Fund. We have a lot of work to do to build understanding and regain the trust of our community,” says Keith Stahley, Salem City Manager, “While we work to set the priorities of the budget, all city employees must continue to be ’at your service‘ to the residents of Salem.”
Next Steps:
All City of Salem Budget Committee Meetings are public and take place at the City’s Council Chambers, 555 Liberty Street SE, Salem, OR 97301. See our website for scheduled meeting dates.
You can also watch on YouTube at https://www.youtube.com/@CCMediaSalem
Why do we forecast?
A forecast is an educated, good faith estimate of what our financial conditions may be in the future. It captures a point in time and is a useful tool for revenue and expenditure planning.
Looking ahead five years and estimating our revenues and expenses is an important financial best practice for our credit rating. The City’s credit rating helps keep borrowing costs low when voters approve bonds for larger expenses like the 2022 Community Safety and Livability Bond.
About the General Fund:
The General Fund is the principal operating fund of the City. Approximately 80% of the General Fund's expenses are for employees who provide services to the community.
Services in the City’s General Fund include:
How did we get here?
Since Oregon instituted Measures 5 and 50 to set a permanent tax rate and limit the annual growth of property taxes, revenue in the City’s General Fund has increased at a slower pace than expenses. The City has not been able to increase revenue sufficiently to support the current level of services provided to the residents of Salem.
What is the City doing?
During FY 2024, the City Council reduced 6.35 positions and operating hours at the Library as well as 4 positions in the Police Department.
Last year, the Salem City Council approved service reductions in the FY 2025 General Fund budget totaling more than $3.8 million and included:
The City of Salem is continuing to be proactive in finding a solution to this issue by:
Over the next several months, Salem will continue to share information on the budget process and provide full transparency about the preferences and priorities established by the City Council and Budget Committee on behalf of the City. If changes to Salem’s budget are not made, the forecast shows that a budget cannot be adopted for FY 2027 and the funding gap will increase to $29 million by 2030.
The community is invited to learn more about this issue by visiting The City of Salem’s Website (www.cityofsalem.net/servingsalem) and taking an online survey to help us better understand how to share information with our residents about our shared budget priorities.