The city of Salem is not alone in its struggle to fund the services it is expected to provide – services like police protection, firefighting, libraries, clean water, K-12 education, and the like. Many cities, counties and other local government entities around the country are struggling as well.
The reason, simply put, is that local government services are linked to population growth. As population grows, so must services. That is expensive. But many local governments are constrained in various ways in the manner in which they raise revenue. In Oregon, a major constraint is the passage of Measure 5 in 1990 that limits property tax increases on most properties to three percent a year. The property tax funds more than half the city of Salem’s general fund revenue.
Some context can be placed around the relationship between local government services and population growth by comparing them over time. Local government employment can serve as a kind of proxy for provision of services. After all, it takes people to provide services – personnel are about 75 percent of the city of Salem’s budget. And, local government employment is by far the largest portion of total government employment in Oregon. Three out of four government employees in 2022 state-wide were local government employees.
How have local government employment and population growth increased over the years?
First, a brief discussion of what local government is – it’s more than just cities. It also includes counties and special districts.
Over one thousand special districts exist in Oregon because, according to the Special Districts Association, “Inadequate revenue bases and competing demands for existing taxes make it difficult for cities and counties to provide all of the services that their constituents want.” So special districts are formed to pay for certain services. Currently 35 different types of special districts (school, fire, library, etc.) raise revenue to pay for services in ways that include issuing bonds and taxing service users. Special districts are governed by elected boards of directors
So, the first question to ask is: has local government employment grown over the years?
The answer is: Mostly yes, compared to federal and state government employment.
Some 28,000 people worked in federal government employment in 2022, ten percent of total government employment in Oregon. This was a decline of seven percent from 2001.
The Salem area had a small number of federal government employees in 2022 (1,400) and this number declined slightly from 2001 as well.
State government employment growth state-wide has been mostly flat for the same time period, after accounting for two large changes regarding who is classified as a state employee. In 2022, approximately 45,000 people worked in state government statewide (15 percent of total government).
Approximately half of state government employees work in the Salem MSA, and this number has only grown by a small handful from 2001 to 2022.
Now let’s compare local government employment growth to population growth in the Salem area and around Oregon.
Oregon counties with population growth of 20 percent or higher between 2001 and 2022 were selected for comparison. It should be expected that local government employment will grow as the population grows, and that is mostly what happened (see table).