The City of Salem is looking at a $282,000 deficit in the general fund next year after making more than $300,000 in cuts.
City Manager Lisa Peck told the city council during a Monday night budget workshop three issues are driving the deficit: a loss of state pass through revenue of over $300,000, the cost of the police pension fund, and employee health insurance.
When work began on the budget, the deficit was more than twice as much.
The cuts include the elimination of a police officer when an officer retires later this year. However, Chief Todd Boles says the move will not result in a reduction of the number of officers on the street. In fact, the city is looking at having a fully staffed police department in a number of years, including the return to two detectives. The department will have 17 sworn officers. The department has received a $20,000 a year grant to help pay for the Axion body cameras.
In the public works department, the assistant director position that is currently vacant will not be filled. The number of part-timers being hired for the leaf vacuum is being cut as fulltime staff is handling most of the workload.
The library board will now pay for employee health insurance and liability insurance out of its own budget, instead of the general fund.
The city is budgeting $100,000 again this year to continue improvements to the city hall building, concentrating on stabilizing the rear wall in the coming year.
The city is also being hit hard by rising electric rates. More is being budgeted this year after an 18-percent increase was already added to this year’s budget.
The new employee health insurance plan that was supposed to save money hasn’t. Peck says part of the reason is more claims, but she still feels the decision to switch was a good one since they are getting more data on usage and bills are getting paid timelier.
The loss of state dollars is a result of a continued decline in personal property tax revenue and a cut in the local government distributive funds. Other revenue sources, including sales and property taxes, are forecast to be stable.
Peck says the city can live with the deficit in the coming year but notes the $3-million reserves will not last forever. The general fund budget is $7.7 million, down $100,000 from last year.
The council will review the utility and special fund budgets at another work session in March. The new budget year begins May 1st.
