Salem City Council denies public vote on worker payroll tax

Despite overwhelming opposition, councilors pass tax with 5-4 vote after contentious debate

In the face of near unanimous opposition expressed during public comment, Salem City Council passed a new tax shouldered entirely by the paychecks of people who work in Salem.

Carried with a 5-4 vote, four City Councilors and Salem Mayor Chris Hoy supported passing the tax without a public vote despite hours of public testimony (45 people signed up to speak) that, combined with written public testimony, represented overwhelming opposition to the “payroll tax.”

Salem Mayor Chris Hoy getting his knickers in a twist because a colleague didn’t think he was taking public feedback into consideration when bypassing a public vote to implement a new tax on workers in Salem.

Across the dozens of speakers, objections to the tax ranged from cost of living to denying the public a chance to approve the tax themselves. Despite the bulk of opposition to the tax falling in the latter category, Mayor Hoy and his cadre of council support focused mainly on using fear as a motivator by describing the devastation to Salem if this tax didn’t pass.

Based on the way the tax is currently described in city documents, and based on responses from Salem officials at the July 9 council meeting, here’s what you can expect:

• A 0.814% tax on all wages (including tips) for nearly all workers in Salem. Exceptions include folks making minimum wage ($14.20/hour) or lower.

• According to the Salem Reporter, when you consider the average wage in Salem is around $29.90/hour - the average person working in Salem would pay an additional $42 a month or more than $500 each year.

• For those making just north of minimum wage, say $15/hour, you can expect to see an additional $20/month or about $250/year taken from your paycheck.

• You are subject to this tax if you work in Salem. It doesn’t matter where you live, or where the business you work for is located. If you work in Salem, and make more than minimum wage, you pay this tax.

• You are subject to this tax even if you only partially work in Salem. City Councilor Julie Hoy raised a scenario during the City Council meeting where a pizza is delivered to a Salem address from outside the City. The delivery driver would need to pay payroll tax to reflect the time spent “working” in Salem (they would pay tax on the tip, too).

What will this tax fund?

Mostly cops. Some fire department. But also homeless services and the administrative costs of implementing and collecting the tax revenue from workers. Salem officials expect the new payroll tax to raise nearly $28 million per year. 

Abbey McDonald and Rachel Alexander at the Salem Reporter did a really thorough job of explaining the funding targets in their July 6 report (emphasis added):

“The police department will get nearly half, at $10.5 million a year…$7 million would go to sustain current operations, $1.5 million to fund and expand the homeless outreach team, and add an additional $2 million to hire 13 officers for a community policing program focused downtown.

Homeless services…would get $7.9 million according to the staff report. Those programs are currently being funded with state grants and federal Covid relief money. The city otherwise does not have money in place to keep those services running beyond 2025.

The fire department would get the next largest chunk at $6.5 million…$4.2 million would go to maintain current services, and $2.3 million would pay for an additional 12 employees. Without additional funding, the department will not be able to operate two planned new fire stations to be built starting in 2028.”

Read MacDonald and Alexander’s entire article for full details. It’s the best way to learn what this new tax will look like in practice.

Smaller paychecks for Salem’s working class came with heated emotions, sharp words, and a heaping helping of hypocrisy from Salem Mayor Chris Hoy

Based on the public comment and subsequent City Council debate, it’s clear that logic and reason took a backseat to emotion and pride for this vote. With almost no support from the public, Councilors supporting the tax were left to devise their own motivations for approving this tax without a public vote. 

In their struggle to articulate a rationale for rushing this through without a public vote, Mayor Chris Hoy ended up chastising City Councilor Deanna Gwyn (Ward 4) when she told councilors supporting the tax without a public vote - “shame on you.” 

Hoy took issue with Gwyn’s characterization, even suggesting she broke council rules by impugning the character of her colleagues. However, Hoy then began deriding the concerns of his council colleagues opposed to this tax, or opposed to the way the tax was being passed.

As always, don’t take my word for it - see for yourself here:

https://www.youtube.com/live/BDxMag3u02E?feature=share&t=18593

Gwyn was one of 4 City Councilors that voted against the working class payroll tax along with Councilors Julie Hoy, Vanessa Nordyke and Jose Gonzalez. Prior to the no vote, the same group voted yes to an amendment offered by Councilor Julie Hoy (not related to the Mayor) that would have sent the tax to the public to vote on.

Mayor Hoy, Council President Virginia Stapleton, and her colleagues Trevor Phillips, Linda Nishioka, and Micki Varney voted against the amendment sending the tax to voters, and later in support of passing the tax on Salem’s working class.

By pushing out workers, Salem creates opportunities for surrounding communities

Regardless of how the tax was passed, the impact could create opportunity for surrounding communities. 

By becoming increasingly unfriendly to workers and unaffordable for the various strata of the working class, savvy nearby communities could pick up Salem’s loss. 

Say, for example, the self-employed entrepreneur in Salem that might look to Keizer as a cheaper place to locate. Or the remote worker that works in Salem a couple days a week, looking to keep more of their paycheck by working from a cafe in Independence rather than downtown Salem.

Imagine a worker looking to relocate to the area with the flexibility to choose between, say, Salem and Silverton. Maybe their $80k salary looks more attractive from a Silverton office because they can keep several hundred dollars in their pockets.

Smart local leaders (if that’s still a thing) could take advantage and strengthen their own economies while Salem alienates its own citizenry by denying them a say in this new tax scheme.