The Salem Area Chamber of Commerce is urging Cherriots, the city’s public transit provider, to shelve or send to voters its latest plan to levy a new payroll tax on local employers, warning the move would add financial strain on small businesses already facing rising costs.
In a statement released Aug. 25, the Chamber said the proposed 0.7% employer-paid payroll tax, projected to raise $39 million annually, would disproportionately impact small firms while benefiting what the group described as a limited share of residents. Cherriots estimates the new tax would fund operations serving roughly 4% of the Salem-Keizer population.
Business leaders argue the proposal revives concerns raised in 2015, when a similar Cherriots payroll tax measure was rejected by voters. Since then, the Oregon Legislature in 2018 granted the transit board authority to raise revenue without a public vote, contingent on commitments to include business representation on its board.
“Taxing $39 million from local businesses will hurt all employees and families,” the Chamber wrote, adding that employers could be forced to cut jobs, delay investments, and scale back charitable giving. The group is asking Cherriots to either withdraw the measure or refer it to the ballot.
Pushback from Employers
The Chamber’s opposition underscores tensions between the need for expanded transit funding and the ability of employers to absorb higher payroll costs. Business owners contend that Salem would become the only transit district in Oregon to simultaneously carry a property tax, an employee-paid payroll tax, and an employer-paid payroll tax if the plan advances.
“This would create barriers to growth at a time when Salem should be attracting new investment,” the Chamber said.
Cherriots’ board presented the plan to members of the Salem and Keizer chambers on July 31. Since then, the agency has considered postponing implementation until Jan. 1, 2027, amid concerns from business groups.
Broader Context
Transit agencies across Oregon have sought new funding streams as ridership patterns shifted during and after the pandemic. According to the Oregon Department of Transportation, payroll taxes already account for a significant portion of revenue for agencies such as TriMet in Portland and Lane Transit District in Eugene.
Salem’s Chamber says its position is not about opposing transit service outright but about preserving competitiveness for local businesses. “We value our partnership with Cherriots and recognize the services it provides to our community,” the group wrote, while maintaining that any new levy should be left to voters.
What’s Next?
The Cherriots board has not yet set a final date for deciding on the payroll tax. If adopted without referral, the levy would take effect no earlier than 2027. Business groups are expected to intensify lobbying in the months ahead, pressing for either a ballot measure or full withdrawal.
