Springfield mayor, chamber of commerce discuss possible payroll tax

Springfield Mayor Sean VanGordon gave a presentation to Chamber of Commerce members Tuesday, July 22, about the city’s Fiscal Stability Task Force and its recommendations. A discussion following the presentation included how a proposed payroll tax might work in the city.

The task force, a committee of 12 community members, met for nine weeks earlier this year to identify ways to address the city’s projected general fund operating deficit. The task force made nine suggestions to address the deficit.

Chamber CEO Vonnie Mikkelsen served on the task force alongside several members of the business community, said Paige Walters, senior director of advocacy and economic development at the Chamber. 

“Vonnie’s participation just helped ensure that the business community’s perspective was at the table throughout that process,” she said. “And at the Chamber, we believe it’s essential to bring our business community together for conversations like this to stay informed and also to provide real-time input and feedback for our public partners as these policies begin to take shape.”

On July 1, the city council discussed the recommendations and asked staff to explore a payroll tax and library levy as potential means to balance the city’s budget. 

The council is on break until Sept. 2. The mayor and city councilors are spending the summer informing the community about the task force’s suggestions and receiving feedback.

The council will reconvene in the fall to receive information from staff about how a library levy and payroll tax could be implemented, and then the council will make decisions about what recommendations they want to pursue. Those could include ideas from the task force beyond the library levy and payroll tax. A library levy was not among the recommendations in the task force report but multiple council members suggested it.

Payroll tax still in ‘idea stage’

Officials have not made decisions on how a potential payroll tax in Springfield would be structured, including rates and exemptions. 

“We are getting out in front of you while it is in the idea stage to give people a chance to inform the conversation,” VanGordon said. 

VanGordon answered questions from the audience about how the tax would be shared between employers and employees and what the timeline for implementing it would be. 

The task force recommends that a payroll tax would be shared between employees and employers, with tax rates in the range of 0.1% to 0.2%. For someone making $50,000 a year, a rate of 0.1% would be $50 a year in payroll taxes. For employers with $500,000 annual payroll, a 0.1% tax would be $500 a year. 

According to the report, the task force recommends those rates to achieve a net revenue of $2.3 million based on the city’s $1.8 billion total payroll in 2023. 

Anne Marie Levis, whose business Funk/Levis & Associates guided the work of the task force, said the committee recommended the tax be simple and easy to implement. 

“There are many cities that have made it really complicated and difficult to administer and maybe not great for its business community,” she said during the chamber of commerce presentation.

Levis also said the task force suggested putting guardrails on the tax. VanGordon said those might include defining a process for changing the tax and requiring the city to report what is being done with the funds raised by the tax. 

Information from the task force states the tax would apply to public, private and nonprofit employers. 

VanGordon said the tax would also broaden the tax base to bring in people beside property owners to pay for public services. He said it is thoughtful toward retirees because the tax would not apply to retirement income. 

If the payroll tax moves forward, the mayor said the council will decide whether to enact the tax as a vote of the council or whether it should go to the ballot. 

“If we had gone with a higher tax, I would be standing here telling you that we need to put it out in front of the voters to get this thing going,” VanGordon said. “This thing’s small enough that frankly, I’m not sure. I’m listening to what my constituents have to say about how we move forward and what we should do.”

He said it would take one to two years for the tax to go into effect if enacted. 

Eugene has had a payroll tax since 2021 to help pay for community safety services. Employers, employees and people who are self-employed pay that tax. The employer and self-employment taxes apply to businesses with a physical location in Eugene city limits. The employee taxes are tiered, with employees making minimum wage being exempt from paying the tax. 

The Eugene City Council earlier this month killed its fire service fee, which drew the ire of the business community. The Eugene Area Chamber of Commerce had launched a signature drive to put the fee on the ballot.