Salem, OR – The City of Salem has released its Proposed Fiscal Year (FY) 2026 Budget, addressing a $13.8 million gap in the General Fund through a combination of staffing reductions, one-time revenues, and cost-saving measures. The Interim City Manager’s proposed budget will be reviewed by the City of Salem’s Budget Committee beginning on April 16, 2025.
The City’s $764.2 million proposed budget for 2026 covers the period from July 1, 2025, through June 30, 2026, and includes estimates of revenue and costs of services and capital projects. The Proposed FY 2026 Budget shows significant position reductions impacting both staffing and service levels, including cuts to parks maintenance, Center 50+ outreach programs, recreation programs, and operating hours at the Salem Public Library. Reductions in positions that support Community Planning and Development, Community Services, and City business operations—such as Finance, Legal and Enterprise Services – are also included.
“As Interim City Manager, my top priority is to work toward long-term financial stability for the City while maintaining essential services for the Salem community,” said Interim City Manager Krishna Namburi. “Through temporary cost-saving measures and one-time revenues, we were able to preserve 41 FTE positions and some of the essential services they support. However, despite our best efforts, we are unable to maintain the services the community expects and deserves. Our budget constraints will result in the loss of 51.4 staff positions. This is a significant loss for this organization and our community, and I share in the sadness of seeing these impacts on our colleagues and our community. Our thoughts are with the employees directly impacted, and we are committed to supporting them through this difficult transition.”
Impacts to Services and Staffing. To comply with Oregon State law requiring a balanced budget by aligning anticipated revenues with projected expenditures, the City has proposed difficult but necessary reductions, including:
- More than half of Salem Public Library’s staff positions,
- Close to 30% of the City staff who support parks maintenance and recreation programs,
- Two part-time staff at Center 50+,
- Community Services Administration, including the elimination of the Deputy City Manager position
- Elimination of some vacant positions in Finance, Enterprise Services, Community Planning and Development, and a filled part-time position in Legal.
Community-Led Efficiency Recommendations. Two advisory committees of Salem residents and business leaders have helped guide the City’s response to its structural deficit. Earlier this year, the Forecast Review Team’s recommendations led to a $3.9 million reduction in the projected FY 2026 deficit. Additionally, a City Efficiency Committee found no inordinate waste in the General Fund and recommended increasing intergovernmental collaboration, exploring alternative service delivery, reducing employee overtime and turnover, implementing AI solutions to enhance efficiency, and leveraging performance audits to be more efficient.
Cost Control Measures, One-Time Revenues, and Ongoing Savings. In February 2025, the City introduced immediate, temporary cost control measures to reduce the deficit heading into FY 2026. Measures such as reducing staff travel, training, consultant engagements, equipment purchases, and holding some vacant positions open is anticipated to yield more than $1.3 million in savings in the remainder of FY 2025. To reduce the size and scope of future reductions, most of these cost control measures will remain in place for FY 2026, with an additional $1.11 million anticipated in savings.
In addition to cost savings, the City secured one-time revenues totaling $3.62 million in FY 2025 and FY 2026, including:
- $2 million from the State of Oregon: In March 2025, the City reached an agreement with the State to support a security perimeter around the State Capitol. This agreement will reduce vehicle traffic on State Street to two lanes and accommodate a dedicated access lane for parking spaces south of the Capitol.
- $1.62 million transfer from the Cultural Tourism Fund: During COVID, the City used American Rescue Plan Act (ARPA) funds to offset tourism-related revenue losses, particularly the decline in transient occupancy taxes due to travel restrictions. As tourism has rebounded, the remaining $1.62 million in ARPA funds previously allocated to the TOT fund will be reallocated to the General Fund.
Starting July 1, 2025, the City will assume emergency medical services from its former contractor. A new EMS fund will manage related revenues and expenses, taking over the cost of 9-1-1 dispatch service for ambulance transport from the General Fund. The City anticipates an additional $900,000 in ongoing savings from these changes to emergency medical services beginning July 1, 2025.
The Five-Year Local Option Levy. The Budget Committee’s work takes place within the context of a broader community conversation. The Salem City Council has referred a five-year local option operating levy to voters for the May 20, 2025, special election.
If passed, the proposed local option levy would generate an estimated $14 million for services in FY 2026 and a total of $76.4 million over five years. The revenue generated would be placed in a dedicated fund overseen by a committee to ensure that the revenue is used only for purposes outlined in the measure, including:
- Restoring and continuing Salem Public Library services.
- Operation of Center 50+ including classes, activities, outreach services, and support services.
- Recreation programming, such as youth day camps, youth sports, and community events.
- Management and maintenance of more than 90 parks, including facilities, playgrounds, splash fountains, sports fields, trails, and more.
This potential revenue is not included in the FY 2026 Budget. If voters approve the levy, an amended budget proposal will be provided to the Budget Committee on May 28th for consideration. Most of the recommended reductions in the FY 2026 Budget proposal would be reinstated.
The Path Forward. Even with these actions, the structural deficit in the General Fund remains. By FY 2027, the General Fund balance is projected to fall below Council policy. Without new revenue, the City may be unable to adopt a balanced budget by FY 2028, with the fund balance depleted by the end of FY 2029. Public safety—long identified as the community’s top priority—faces potential reductions in future years without a sustainable solution.
“This budget year offers several opportunities to address these challenges,” said Namburi. “Our goal is to close the gap through a combination of revenue, efficiencies and cost savings. Every dollar counts. Together, with the continued collaboration of the City Council, staff, community partners, residents, and businesses, we will navigate these challenges and build a more sustainable and resilient future for Salem.”
Next Steps for Salem’s FY 2026 Budget. The Budget Committee begins their work on the City Manager’s proposed 2026 budget at the first of four scheduled meetings Wednesday, April 16, at 6 p.m. at Salem Council Chambers, 555 Liberty Street SE., in Salem. Weekly Wednesday meetings continue April 23, April 30, and May 7. All will be held at Council Chambers.
Any person may provide written testimony on the City and Urban Renewal Agency budgets for consideration by the Budget Committee. Send written testimony to udgetoffice@cityofsalem.net“>budgetoffice@cityofsalem.net by 3 p.m. the day of the meeting. In-person public comment may be provided at the meeting. To provide testimony through video conference, sign up online the day of the meeting between 8 a.m. and 2 p.m. The meetings are available to view online through the CC:Media YouTube channel or Comcast channel 21.
# # #
