City leaders are beginning to explore street fees, fuel taxes and other revenue options as Salem’s transportation fund approaches a projected deficit.
Salem needs roughly $11 million more each year just to keep its streets from deteriorating beyond their current condition, city officials told the City Council during a Monday night work session focused on the growing financial strain facing the transportation system.
The Aug. 17 discussion marked the beginning of a broader financial roadmap process as the city weighs how to pay for streets, sidewalks, traffic signals and other transportation infrastructure while traditional revenue fails to keep pace with rising costs.
Salem’s overall pavement condition index is 61, placing the city’s streets in the “fair” category. The comparable citywide score fell from 68 in 2018 to 61 in 2022, while the share of streets rated poor or very poor increased.
Public Works Director Brian Martin told councilors that existing funding has not been enough to keep pace with maintenance needs.
“We’re continuing to fall behind,” Martin said.
City staff estimated Salem would need about $28 million annually for transportation operations and maintenance to prevent pavement conditions from continuing their downward trend. Current funding leaves an approximately $11 million annual gap.
Getting Salem’s pavement system into the “good” range would be substantially more expensive. Staff estimated an ongoing annual need of about $41 million, creating a funding gap of roughly $24.7 million.
The financial pressure extends beyond pavement. Salem maintains traffic signals, signs, pedestrian crossings, sidewalks, street trees and other right-of-way infrastructure. Staff said about 72% of the Transportation Services Fund’s revenue comes from the State Highway Fund, a source heavily dependent on transportation-related taxes that has not kept pace with expenses.
Under the city’s current financial projections, the transportation fund’s ending balance is expected to fall below zero in fiscal year 2029.
Councilors did not approve a new tax or fee Monday. Instead, the discussion turned toward options Salem could study to close at least part of the gap.
Those possibilities include a local fuel tax, transportation or street utility fees, pavement or sidewalk maintenance fees, county vehicle registration fees, bonds and other revenue sources. Councilors also questioned whether transportation funding should better reflect the growing use of Salem streets by delivery businesses and other commercial users.
A local fuel tax would require voter approval, while some types of fees could potentially be enacted by the City Council after further study and public engagement.
The city is expected to send possible revenue options to the Council Finance Committee for additional evaluation and conduct community outreach before any proposal advances.
Meanwhile, Salem could soon receive a clearer picture of how quickly its roads are deteriorating. Staff said the city’s new 2026 pavement-condition data has been delivered and is being processed, with updated citywide results expected within the next several months.