FY2022 Salem City Budget
Section 1 - Mayor's Letter and General Overview
Section 3 - Budget Overview-All Funds
Section 4 - Budget Overview-School
Section 5 - Budget Overview-Enterprise Funds
Section 6 - Financial Forecasts, Plans, Policies, and Debt
Section 7 - Capital Improvement Program
Section 8 - Departmental Budgets
Section 10 - Glossary of Terms
“The proposed FY2022 budget represents a strong commitment to the people we are fortunate enough to have been elected to serve,” said Mayor Kim Driscoll in her budget message to the City Council. “It continues our balanced and responsible approach to City finances. It invests in the critical services that make Salem a vibrant city and one with schools in which we can all take pride – in short, a stronger, more livable city for all.”
The proposed FY2022 Salem general fund budget is $160,410,557, a change of 4.6% over the FY2021 adjusted general fund budget. Fixed costs, such as health insurance, pension and retirement payments, insurance, debt payments, and state assessments, will increase by about $2.2 million in F2022, accounting for about one-third of the general fund budget increase.
The budget for Salem Public Schools is set to increase by $2,296,177, or 3.6%, over the FY2021 adjusted school budget. This does not include school-related costs that appear elsewhere in the budget, such as school employee health insurance increases, unemployment costs, debt for school building projects, and so forth. The enterprise fund budgets will increase by $426,967, or 2.2%, over the FY2021 adjusted enterprise funds budget, due to increases in assessments for these services and the need for infrastructure maintenance and upgrades.
Included with the budget is the City’s five year capital plan. The FY2022 investments in the plan include $2.4 million in roadway and sidewalk work, new school building repairs, major water and sewer system enhancements, seawall and climate change resiliency projects, more than a half-million dollars in ADA repairs and projects, a new Fire engine, funding for playground and athletic court improvements, and body-worn cameras for police officers, among many other capital projects.
The FY2022 budget proposes two new major initiatives, the establishment of a new Sustainability, Energy, and Resiliency Department focused exclusively on climate change and the creation of a new Director of Diversity, Equity, and Inclusion (DEI).
“Salem’s commitment to preparing for climate change has spanned many years, from the development of our hazard mitigation plans and climate vulnerability plan several years ago, to prior capital investments in stormwater management, flood measures like seawalls and living shorelines, our current thoughtful approach to revising our flood zone ordinance, and the joint Salem-Beverly climate resiliency plan,” said Mayor Driscoll. “We have also made meaningful steps toward reducing our own carbon footprint through expanding electric vehicle infrastructure and fleet composition, conversion of our streetlights to LED fixtures, installation of rooftop solar on schools and buildings, solarize and efficiency discount programs for residents, our municipal electrical aggregation program, our forthcoming green building ordinance, and our efforts to grow micro-mobility and alternative transportation options. The creation of this new department will help us to tackle the many action items arising from our work with the City of Beverly on a joint climate Resilient Together plan.”
The Director of Diversity, Equity, and Inclusion will “carry on the important work started in this past year by the Race Equity Task Force and, prior to that, by entities such as our No Place for Hate Committee,” said Mayor Driscoll. “This spring, building on the recommendations of the Task Force, we will propose the establishment of a permanent Race Equity Commission, to implement the action plan developed by the Task Force. The DEI director will lead this work and take on many of the other components of this shared agenda, including working in collaboration with the Latino Affairs Coordinator to advance our Welcoming City application, our Government Alliance on Race and Equity certification process, and more. Salem is an inclusive place, but we still have work to do to improve in these areas and ensure that we remain a welcoming community for everyone.”
In her budget message, Mayor Driscoll also highlighted Salem’s ongoing efforts to recover from the pandemic, and the impact of the ensuing economic slowdown on the City’s current fiscal condition: “The COVID-19 pandemic triggered an unforeseeable financial crisis. With economy activity coming to a near complete standstill for much of FY2021, City revenues were substantially impacted. Income to the City from meal and room excises, parking fees, and even permits and licenses, diminished immediately and slowly has been recovering. Last year we made difficult decisions to put off certain expenditures, reduce budget requests, hold vacant positions open longer than we normally would, shorten City office hours, and implement wage freezes and furloughs, all with the goal of managing the unpredictable fiscal situation."
"I am proud to say that those steps worked," Mayor Driscoll continued. "Our revenues are rebounding, and our local economy is coming back stronger than ever. Over the past year Salem had a net zero loss in businesses and our storefront vacancy rate decreased to 4%. Three of every five residents who lost their job at the height of the pandemic recession are now working again. We weathered the fiscal challenges without having to draw down substantially from our reserve funds or tap heavily into our levy capacity. All of this is thanks to large part to the professionalism of City staff and leadership, the early actions taken to support businesses and embrace investment in our city, and our thoughtful approach to managing municipal finances.”
The FY2022 budget continues the City’s stable financial management practices and sustainable and transparent budgeting. Professional financial management standards have allowed the debt payment as a share of the budget to be reduced by 42% over the last 15 years, during which time the average single-family tax bill in Salem increased by half as much as it did in the 15 years before 2006. The FY2022 budget recognizes and respects the impact of property taxes on Salem residents, especially as many are suffering from the financial hardship afflicting many Americans today. Salem’s average tax bill change over the last decade has been below the average for the region and bolstered by the adoption of as many exemptions and abatements as practical, particularly focused on the community’s neediest taxpayers, including lower income residents, seniors, veterans, and those living with disabilities. Salem has never sought a Proposition 2-1/2 override and for FY2022 will continue to tax below the allowable levy limit. For FY2022, Salem’s excess levy capacity will increase by 32% to $6,104,855, the highest that it has ever been and a further demonstration of the City’s prudence and care with taxpayer dollars.
Salem’s fiscal practices have resulted in an affirmation of the City’s historic high AA bond rating for the last eight years in a row and regular receipt of recognitions and awards from the Government Finance Officers’ Association, a national agency that provides professional guidelines for government budgets and fiscal practices.
New growth has been estimated at $1.5 million, which represents $1.5 million less tax burden on existing property owners. “Another key factor in enhancing our local economy and contributing to new revenues to help meet the projected budget deficit are the public and private investments we continue to see in our community,” explained Mayor Driscoll. “These projects enhance our short- and long-term economic growth, create much needed housing, add to our tax base, and generate jobs. Without responsible new growth we cannot provide the services and improvements that our constituents rightly demand and deserve. Given the reliable increase in fixed costs to the City and the financial challenges of the past year, a reflexively anti-growth position is equivalent to endorsing substantial tax increases on Salem homeowners and reduction in critical City services like public safety and public works. With appropriate new growth comes much needed housing, commercial enterprises with jobs, and new revenues to support the needs of Salem taxpayers and local government.”