Children, homeless are biggest losers in Salem city manager's proposed 2020 budget

• "When we can't meet that balance (between revenues and expenses), we let people go," City Councilor Brad Nanke said. "We're down at the bone now."

The City of Salem could cut in half the mayor's signature homeless rental assistance program, eliminate the equivalent of more than eight full-time positions and end anti-drug and after-school youth development programs in an attempt to close its growing budget gap.

The proposed cuts are part of City Manager Steve Powers' budget for the 2020 fiscal year, which was released Friday.

"We’re not on a fiscally sustainable path," Powers said. "We’re spending more on a recurring basis than we’re bringing in. I, by policy, have to propose a budget that starts to bring that in balance."

The proposal is the starting point for the city's budget deliberations; a budget committee will take up the proposal Wednesday and the Salem City Council must approve a balanced budget for the fiscal year beginning in July.

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City officials need to close an estimated $9.2 million gap in the general fund, which pays for key city services such as police, fire and libraries.

Salem has continued to drain its working capital to make up for revenue shortfalls.

The city's beginning working capital for the 2019 fiscal year was $25.9 million; that would drop to $19.8 million if Powers' budget is approved.

A city financial forecast shows the city reserves could be drained by the 2023 budget year.

The city will receive approximately $696.3 million overall in 2020 –  including from other sources such as state and federal grants –  but its general fund revenue is expected to be $128.8 million.

"Our fiscal challenge is really in the general fund," Powers said. "For Salem, (those areas include) police, fire, parks, library, municipal court, this office — those services that don’t really have a dedicated funding source."

Programs on the chopping block

Several factors have widened the funding gap, including city councilors reopening two fire stations and starting a homeless rental assistance program without having enough money for those services in the long-term. Insufficient property tax revenues are another issue, according to city officials.

Powers is recommending cutting the city's contribution to the homeless program from $1.4 million a year to $700,000.

When the program launched in 2017, the goal was to get 100 homeless people off the streets every year. The program has moved more than 110 people into housing since then, according to Friday's proposal. It would have funding to help approximately 50 people in the next fiscal year.

“We had a really aggressive startup and the numbers of available apartments or houses is slowing down and he’s sizing it to that new reality,” Salem Mayor Chuck Bennett said.

 “I want to make sure what this means. I think this is a very important program, and so does the council.”

Also on the chopping block is Salem's Drug Abuse Resistance Education program, also known as DARE. Cutting it would free up $150,000, and the program would end following the current school year, according to the proposed budget.

The city also would eliminate funding for its after-school youth development program, which will save $176,640.

Salem would halt its $250,000 annual commitment to the proposed sobering center, which several agencies have been working to bring to the city.

“That’s not coming together on a timeline that I believe I can continue to carry,” Powers said.

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"We’re looking at maintaining our core services — police, fire response, library, parks," Powers said. "Unfortunately I believe have to make that recommendation."

Department directors have identified $1.4 million in reductions, including the elimination of 8.75 full-time equivalent positions.

Powers said most of those are positions that are currently open including two part-time positions at the library, a long-range planner position, office assistant positions in community development and the attorney's office, and the DARE officer.

The budget officer position is also tabbed for elimination as current budget officer Kelley Jacobs is retiring. 

Powers said the city is in the process of hiring a new chief financial officer, who will assume some of the budget officer's duties. 

Still, Powers' budget would require "a couple of layoffs" if it's adopted by the council, he said."However between now and June there could be other changes that would allow that person to stay with us if they chose," Powers said.

City operating fee, payroll tax proposals advanced 

To address the general fund gap, city councilors on Monday night advanced out of a work session proposals for a city operating fee and employee-paid payroll tax, though rates for those charges are still undetermined.

Councilors also moved a local gas tax proposal out of the work session. However, the tax would pay for street maintenance and other projects through the city's transportation services fund.

Members of a revenue task force, who brought the revenue proposals before the City Council, have urged councilors to send new charges to local voters for approval instead of approving them in council.

Powers said he did not include any potential revenue from those sources in his budget proposal.

bpoehler@StatesmanJournal.com or jbach@StatesmanJournal.com