Salem Mayor Julie Hoy is putting the city’s budget outlook at the center of her case to voters as the 2026 mayoral race takes shape, arguing Salem is in a stronger financial position than earlier projections suggested.
Hoy discussed the city’s General Fund forecast and the payroll tax debate in a recent interview with Salem Business Journal host Jesse Peone, framing the budget forecast as a key factor that can shape whether the city cuts services, raises fees, or asks voters for new revenue.
A major focus of the conversation was the deficit estimate that dominated last year’s payroll tax debate. Hoy said she opposed the payroll tax from the start and believed the city’s deficit projections needed closer review. Supporters argued the tax would stabilize funding for city services; opponents said it would add costs for employers and workers and raised concerns about the city’s spending plan.
Hoy described pushing for more frequent forecast updates and a closer review of assumptions used in the city’s budget materials, including input she said came from residents and private-sector budget professionals reviewing published documents and identifying potential adjustments.
In the interview, Hoy cited a timeline of forecast changes she said the city has been using internally:
- 2026 projected deficit previously discussed: about $23 million
- After a forecast review process: about $17.7 million
- After further efficiencies and cost-saving measures: about $13.8 million
- Hoy’s latest description of the 2026 picture: “a little over $3 million” on the positive side
Hoy said the improved figure should not be interpreted as extra spending money, adding, “That’s not like cash in the bank.” She did not specify in the interview whether the “positive side” figure reflects a projected year-end balance or a forecast showing revenues exceeding projected expenses, but she described it as a signal of improved projections rather than new discretionary funding.
Hoy credited city leadership for coordinating what she described as a tighter approach to forecasting and financial management, and said the goal has been to build a clearer picture of what the city can sustain over time, rather than reacting to a single-year projection.
The conversation also touched on Salem’s May 2025 local option levy, which voters approved to support the library, Center 50+, and parks services. Hoy said the levy was part of the city’s strategy to maintain those services while the city worked through the broader budget outlook.
Hoy warned that projections can shift as assumptions change and as costs move, and she pointed to the need to keep watching the longer-range picture. She said the most recent multi-year forecast discussed in the interview shows Salem remaining “in the green” over a five-year horizon, a change from earlier projections she described as sliding into the red in later years.
City leaders are expected to revisit the forecast during the next budget cycle as assumptions are updated and as the city refines revenue and expense expectations.
Hoy said the forecast has improved, while cautioning that Salem’s budget remains sensitive to cost growth and changes in assumptions.