TO: Mayor and City Council
THROUGH: Keith Stahley, City Manager
FROM: Josh Eggleston, Chief Financial Officer
SUBJECT:
title
Consideration of a five-year operating levy to fund the Library, Parks, Recreation, and Center 50+.
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
Result Area(s): Good Governance; Natural Environment Stewardship; Safe and Healthy Community; Safe, Reliable and Efficient Infrastructure; Strong and Diverse Economy; Welcoming and Livable Community.
end
SUMMARY:
summary
The City Council held a work session on January 21, 2025 to discuss a potential levy to fund the Library, Parks, Recreation, and Center 50+. At the work session, Council provided direction to return with scenarios for the levy rate. Included in this report are two scenarios for a levy rate of $.98 and $1.09 per thousand of assessed value.
The Issue and Recommendation provide three options for City Council’s consideration. Council may select one of the options or choose another action.
end
ISSUE:
Shall the City Council;
1. Direct staff to return to Council on February 24, 2025 with a resolution referring a five-year local option levy to voters for the May 20, 2025 election at a levy rate of $1.09 per $1,000 of assessed value, or;
2. Direct staff to return to Council on February 24, 2025 with a resolution referring a five-year local option levy to voters for the May 20, 2025 election with a levy rate of $.98 per $1,000 of assessed value, or;
3. Decline to refer a measure to voters at the May 20, 2025 election.
RECOMMENDATION:
recommendation
1. Direct staff to return to Council on February 24, 2025 with a resolution referring a five-year local option levy to voters for the May 20, 2025 election at a levy rate of $1.09 per $1,000 of assessed value, or;
2. Direct staff to return to Council on February 24, 2025 with a resolution referring a five-year local option levy to voters for the May 20, 2025 election with a levy rate of $.98 per $1,000 of assessed value, or;
3. Decline to refer a measure to voters at the May 20, 2025 election.
body
FACTS AND FINDINGS:
Based on Council direction, the City has proposed two scenarios for consideration:
Scenario 1 - $.98 per thousand
A $.98 levy is projected to fund the following services:
• Library - maintain current staffing level (37.5 Full Time Equivalent [FTE]).
• Library - restore some service hours - includes an additional three FTE Library Assistant positions. This service adjustment is prioritizing additional Library hours and is projected to increase the main branch Library hours from 38 to 48 hours and the West Salem Brach from 10 hours to 20 hours per week.
• Parks Maintenance - maintain current staffing (45 FTE).
• Recreation Services - maintain current staffing (5 FTE).
• Center 50+ - Maintain current staffing (9 FTE).
Table 1 displays the estimated revenue generated at a levy rate of $.98 per thousand of assessed value and the estimated net costs for services funded at that rate. These net costs have been adjusted from the information provided on January 21, 2025 to recognize the estimated expense savings for the five-year forecast presented to the Budget Committee.
Table 1
Scenario 2 - $1.09 per thousand
A $1.09 levy is projected to fund the following services:
• Library - maintain current staffing level (37.5 FTE).
• Library - restore service hours - includes an additional eight FTE Library Assistant positions. This service adjustment is prioritizing additional Library hours and is projected to increase the main branch Library hours from 38 to 53 hours and the West Salem Brach from 10 hours to 25 hours per week. This would also allow an outreach team to be formed - focused on bringing “mobile” library programming to underserved geographic areas of Salem.
• Parks Maintenance - maintain current staffing (45 FTE).
• Recreation Services - maintain current staffing (5 FTE).
• Center 50+ - maintain current staffing (9 FTE).
• Community Services Admin - covers 70% of the net cost of the Community Services Administration.
Table 2 displays the estimated revenue generated at a levy rate of $1.09 per thousand of assessed value and the estimated net costs for services funded at that rate. These net costs have been adjusted from the information provided on January 21, 2025 to recognize the estimated expense savings for the five-year forecast presented to the Budget Committee.
Table 2
Accountability Measures
With a local option levy, the City is bound by the ballot language for the use of the funds. In addition to the regular annual financial audit that the City is required to complete, other accountability measures could be considered:
• Segregation of the revenue in a separate fund.
• Specific audit of levy funds for compliance with ballot language.
• Forming an oversight committee (review compliance with ballot language).
Ballot Language
Attached is a draft Ballot Title and Explanatory Statement to refer the local option levy to voters (Attachment 2). The rate and estimated amounts have been left blank and will be completed if council selects a levy rate. Under the Salem Revised Code, the City Council refers the measure or question to voters via a resolution and directs the City Attorney to draft the complete Ballot Title and Explanatory Statement. Both the Ballot Title and Explanatory Statement are required to be fair and impartial explanation of the major effects of the measure. Council may provide feedback on the Ballot Title and Explanatory Statement that will be completed and provided to the Marion County elections official for the May 20, 2025 election if council decides to refer the levy to the voters. The Ballot Title will be published and registered voters of the City may appeal the Ballot Title to the Salem Municipal Court within five business days.
Election Timing - May 2025 Key Dates
February 24, 2025 - Last City Council meeting to approve a resolution authorizing ballot submission.
February 28, 2025 - Last day for governing body to file referral text or prepared ballot title.
March 20, 2025 - Last day to file or withdraw notice of measure election and explanatory statement with the County elections official.
May 20, 2025 - District Election Date.
Election Costs
$35,000 - Estimated district election cost paid to the counties (Marion and Polk), as estimated by the Marion and Polk County elections officials. This estimated cost assumes that the Counties total election costs will be shared with other jurisdictions who are expected to have measures on the May ballot. If the City is the only jurisdiction to have a measure on the May ballot, the City’s costs may be up to four times higher.
BACKGROUND:
In 2023, the City Council held multiple work sessions on continuing General Fund services and forming a Revenue Task Force. On January 22, 2024, Salem City Council 25 members and two alternates for the Revenue Task Force. The Task Force met seven times; considered feedback from eight focus groups, three town halls, and a statistically valid survey; and advanced recommendations to the City Council concerning revenue options to support City services funded by the General Fund. The Task Force recommendations to sustain vital City services were presented at the City Council Work Session on, July 15, 2024. A local option levy was one of the Task Force Recommendations. On November 13, 2024 the Budget Committee further recommended that additional information regarding a local option levy be provided to the City Council.
The City has also been receiving feedback from a survey around community conversations and budget feedback. The survey provided a way for Salem residents, workers and business owners to provide feedback to the City of Salem. The survey was open from October 2024 through January 2025 and was available online in English and Spanish. The results of the survey are included as Attachment 1 to this report.
Local Option Levies (Operating Levies) Generally
A local option levy, also called an operating levy, is a special type of property tax that local governments in Oregon, like cities, counties, or school districts, can ask voters to approve. Local option levies are a methodology for jurisdictions to gain revenue from property taxes over the thresholds set by Measure 5. The levy is only temporary, usually lasting up to five years, and the City must refer the renewal of the levy to voters every five years.
Property Tax Compression
In Oregon, Measure 5 and Measure 50 are laws that limit how much property tax people can be charged through the assessed value of a property and tax rates. These rules can create a problem called compression, which happens when those limits are reached.
Here’s how it works:
• Measure 5 caps property taxes in two categories: one for schools and another for local services like police, fire, and libraries.
• Measure 50 controls how a property's taxable value grows at 3%, which is usually slower than its real market value.
When local governments ask voters to approve extra operating taxes, like local option levies for things like parks or schools, these taxes are added on top of what’s already being charged for operations. If the total taxes go over the Measure 5 limit, which is $10/$1000 of assessed value, optional taxes like local option levies are reduced or "compressed" resulting in the levy collected less revenue.
This means even if voters approve a local option levy, not all the money may be collected, which can cause funding shortfalls for important community services.
Attachments:
1. Community Conversations - Survey Feedback
2. Draft Ballot Title and Explanatory Statement