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City of Salem FY2025 Budget in Brief City of Salem FY2025 Budget in Brief July 1, 2024 – June 30, 2025 www.salemma.gov/fy25 July 1, 2024 – June 30, 2025 www.salemma.gov/fy25 ---PAGE BREAK--- A City that Works for All A City that Works for All The City of Salem’s FY2025 budget lays out an optimistic and forward-looking vision that extends from the City’s existing fiscal strength and its commitment to core public services. It is based on the City government’s mission statement, “to provide open, honest, and pro-active services effectively and efficiently, focusing on the needs of today, with a vision for the future.” The FY2025 budget is centered around livability, improving services, and transparency. Focusing on affordability, sustainability and resilience, and equity will help ensure a more livable and vibrant community for all. Municipal services, policies, and projects must be forward-looking, open to innovation and new approaches, and delivered efficiently and effectively. And City actions should be open, honest, evidence-based, and inclusive. The FY2025 budget builds on the City’s strong existing foundation and will help continue to make Salem a City that works for all. The City of Salem’s FY2025 budget lays out an optimistic and forward-looking vision that extends from the City’s existing fiscal strength and its commitment to core public services. It is based on the City government’s mission statement, “to provide open, honest, and pro-active services effectively and efficiently, focusing on the needs of today, with a vision for the future.” The FY2025 budget is centered around livability, improving services, and transparency. Focusing on affordability, sustainability and resilience, and equity will help ensure a more livable and vibrant community for all. Municipal services, policies, and projects must be forward-looking, open to innovation and new approaches, and delivered efficiently and effectively. And City actions should be open, honest, evidence-based, and inclusive. The FY2025 budget builds on the City’s strong existing foundation and will help continue to make Salem a City that works for all. ---PAGE BREAK--- The Budget in Brief…Briefly The Budget in Brief…Briefly A City’s budget reflects its values and its vision for the future. More than just a technical compendium of numbers, a budget should tell the story of the community that it serves. Because the budget is such a centrally important document for understanding a City’s values and vision, Salem consistently strives to find new ways to make its budget accessible, transparent, and more understandable. This Brief is intended to provide a key overview of the FY2025 budget. You can find the full FY2025 budget online at salemma.gov/fy25 and send any questions to [EMAIL REDACTED]. A City’s budget reflects its values and its vision for the future. More than just a technical compendium of numbers, a budget should tell the story of the community that it serves. Because the budget is such a centrally important document for understanding a City’s values and vision, Salem consistently strives to find new ways to make its budget accessible, transparent, and more understandable. This Brief is intended to provide a key overview of the FY2025 budget. You can find the full FY2025 budget online at salemma.gov/fy25 and send any questions to [EMAIL REDACTED]. Budget Snapshot Salem has received the Distinguished Budget Presentation award from the Government Finance Officers Association for the last 14 years in a row, in recognition of the budget document’s clarity and level of detail. ---PAGE BREAK--- FY2025 Key Priorities - 1 FY2025 Key Priorities - 1 Affordable Affordable Make Salem a more livable community for people of all means. We do this by advancing policies and initiatives to address housing affordability and attainability, strengthening the City’s internal efforts on neighborhood stability, safety, and social services, and maintaining and building on sound fiscal practices to deliver City services and projects as efficiently as possible. Make Salem a more livable community for people of all means. We do this by advancing policies and initiatives to address housing affordability and attainability, strengthening the City’s internal efforts on neighborhood stability, safety, and social services, and maintaining and building on sound fiscal practices to deliver City services and projects as efficiently as possible. Resilient Resilient Continue commitments to prepare for the climate crisis and lessen our contribution to it. We do this by advancing the offshore wind port, investing in projects and programs that meet the goals of the Resilient Together plan, and continuing and expanding efforts to reduce passenger vehicle trips and make alternative methods of transportation safer, ordinances and projects to reduce building emissions, and programs to increase renewable power supply. Continue commitments to prepare for the climate crisis and lessen our contribution to it. We do this by advancing the offshore wind port, investing in projects and programs that meet the goals of the Resilient Together plan, and continuing and expanding efforts to reduce passenger vehicle trips and make alternative methods of transportation safer, ordinances and projects to reduce building emissions, and programs to increase renewable power supply. ---PAGE BREAK--- FY2025 Key Priorities - 2 FY2025 Key Priorities - 2 Equitable Equitable Build on Salem’s efforts to create a more welcoming and inclusive city for all. We do this by supporting the Director of Diversity, Equity, and Inclusion in training City staff, interrogating City policies and programs to ensure they are equitable, and structuring services to serve and support historically under-served populations through engagement and language access. Build on Salem’s efforts to create a more welcoming and inclusive city for all. We do this by supporting the Director of Diversity, Equity, and Inclusion in training City staff, interrogating City policies and programs to ensure they are equitable, and structuring services to serve and support historically under-served populations through engagement and language access. Forward Looking Forward Looking Instill a long-term and forward-looking vision in the City’s plans and actions. We do this by remaining focused on capital projects and investments that meet our existing plans and our Salem 400+ goals, aligning department investments with the City and School’s strategic plans, and engaging in innovative approaches to service delivery and outreach. Instill a long-term and forward-looking vision in the City’s plans and actions. We do this by remaining focused on capital projects and investments that meet our existing plans and our Salem 400+ goals, aligning department investments with the City and School’s strategic plans, and engaging in innovative approaches to service delivery and outreach. ---PAGE BREAK--- About Salem About Salem Population: 44,722 Total employment: 29,757 People who live elsewhere and commute into Salem for work: approx. 17,000 Median household income: $79,196 Persons in poverty: 13.9% Median home value: $644,680 Median condo value: $492,579 Median rent: $2,791 Housing units: 20,349 Bachelor’s degree or higher: 48.2% Students in Salem Public Schools: 3,887 Salem High School graduation rate: 88.1% Economically disadvantaged students: 64% Non-White students: 62% Non-White City population: 23% Speak a language other than English at home: 21.6% Under 18 years of age: 15.6% Over 65 years of age: 16.4% Square miles: 8.0 Road miles: 115.3 Public parks and open spaces: 43 Population: 44,722 Total employment: 29,757 People who live elsewhere and commute into Salem for work: approx. 17,000 Median household income: $79,196 Persons in poverty: 13.9% Median home value: $644,680 Median condo value: $492,579 Median rent: $2,791 Housing units: 20,349 Bachelor’s degree or higher: 48.2% Students in Salem Public Schools: 3,887 Salem High School graduation rate: 88.1% Economically disadvantaged students: 64% Non-White students: 62% Non-White City population: 23% Speak a language other than English at home: 21.6% Under 18 years of age: 15.6% Over 65 years of age: 16.4% Square miles: 8.0 Road miles: 115.3 Public parks and open spaces: 43 ---PAGE BREAK--- Structure of Salem’s City Government Structure of Salem’s City Government Residents School Committee Superintendent/Schools Mayor Health Sustainability Electrical Finance Engineering Public Services Human Resources Community Services Traffic & Parking Legal, Licensing & DEI Planning & Community Development Police Fire IT/GIS Building Inspector City Council City Clerk ---PAGE BREAK--- Forming the Budget Forming the Budget Budget Timeline Budget Timeline January: Budget message sent by Mayor to Department heads and Superintendent of schools. January - February: Department heads develop budget requests. March - April: Department heads meet with Mayor to review budgets and capital requests. April: School Committee votes on requested budget. May: Budget filed with City Council. May-June: Council’s Administration & Finance Committee holds budget hearings; Council votes on the budget. July 1st: New fiscal year begins. December: City Council sets tax rate. January: Budget message sent by Mayor to Department heads and Superintendent of schools. January - February: Department heads develop budget requests. March - April: Department heads meet with Mayor to review budgets and capital requests. April: School Committee votes on requested budget. May: Budget filed with City Council. May-June: Council’s Administration & Finance Committee holds budget hearings; Council votes on the budget. July 1st: New fiscal year begins. December: City Council sets tax rate. Sections of the Budget Sections of the Budget Section 1: Mayor’s budget message Section 2: Overview of the City of Salem Section 3: Overview of the budget Section 4: Schools budget Section 5: Enterprise Funds budget Section 6: Financial forecast, plans, and policies Section 7: Capital plan Section 8: Department budgets Section 1: Mayor’s budget message Section 2: Overview of the City of Salem Section 3: Overview of the budget Section 4: Schools budget Section 5: Enterprise Funds budget Section 6: Financial forecast, plans, and policies Section 7: Capital plan Section 8: Department budgets Budget Snapshot An enterprise fund is a separate accounting mechanism for services for which a fee is charged by the City and for which the revenues and spending are not comingled with the general budget. Salem has four enterprise funds: water, sewer, trash, and cable access. ---PAGE BREAK--- What’s the Budget based on? What’s the Budget based on? The budget in Salem is shaped by six sources of information: 1. Department requests aligned with objectives and the City and Schools’ strategic plans. 2. Mayor and City Council priorities reviewed at the annual strategic planning retreat and throughout the year. 3. School Committee requested budget based on Superintendent and district input. 4. Resident feedback gathered throughout the year. 5. Existing plans 6. Fixed costs. The budget in Salem is shaped by six sources of information: 1. Department requests aligned with objectives and the City and Schools’ strategic plans. 2. Mayor and City Council priorities reviewed at the annual strategic planning retreat and throughout the year. 3. School Committee requested budget based on Superintendent and district input. 4. Resident feedback gathered throughout the year. 5. Existing plans 6. Fixed costs. Some Existing Plans that Shape the FY2025 Budget Imagine Salem Open Space & Recreation Plan Update Race Equity Task Force Plan Salem for All Ages Action Plan Resilient Together Climate Action Plan Pavement Management Plan Salem Public Schools Strategic Plan Historic Preservation Plan Emergency Management Plan Housing Roadmap Bicycling Master Plan Public Art Master Plan School Facilities Master Plan Energy Services Audit Hazard Mitigation Plan Some Existing Plans that Shape the FY2025 Budget Imagine Salem Open Space & Recreation Plan Update Race Equity Task Force Plan Salem for All Ages Action Plan Resilient Together Climate Action Plan Pavement Management Plan Salem Public Schools Strategic Plan Historic Preservation Plan Emergency Management Plan Housing Roadmap Bicycling Master Plan Public Art Master Plan School Facilities Master Plan Energy Services Audit Hazard Mitigation Plan ---PAGE BREAK--- Revenues for Salem’s Budget - 1 Revenues for Salem’s Budget - 1 Property Taxes The amount raised by property taxes cannot increase over the previous year’s amount by more than 2.5% plus the amount of new growth. To do so requires a “Proposition 2-1/2 override” vote by the community, which Salem has never needed. If the amount that is raised in property taxes is less than the amount that can be raised, the community has “excess levy capacity,” which is seen as a measure of fiscal health. Salem’s excess levy capacity in FY2025 will be $7.8 million, which is considered strong. The more new growth a community has, the less it must rely on taxes from existing taxpayers. Property Taxes The amount raised by property taxes cannot increase over the previous year’s amount by more than 2.5% plus the amount of new growth. To do so requires a “Proposition 2-1/2 override” vote by the community, which Salem has never needed. If the amount that is raised in property taxes is less than the amount that can be raised, the community has “excess levy capacity,” which is seen as a measure of fiscal health. Salem’s excess levy capacity in FY2025 will be $7.8 million, which is considered strong. The more new growth a community has, the less it must rely on taxes from existing taxpayers. Local Receipts Salem has nearly 20 different types of local receipts, which include things like motor vehicle excise, meals excise, license and permit fees, and so forth. Enterprise Funds Revenues These are payments made by users of enterprise services (water, sewer, trash). Some communities do not include enterprise fund revenues and expenditures in their budget document, however Salem does so to ensure greater transparency. State Aid The largest category of state aid is for schools, however there are other smaller categories of state funding that the City receives, as well. Other Salem uses excess receipts from City programs like the Witch House and Golf Course to help fund the budget and reduce the amount that must be raised through property taxes. Local Receipts Salem has nearly 20 different types of local receipts, which include things like motor vehicle excise, meals excise, license and permit fees, and so forth. Enterprise Funds Revenues These are payments made by users of enterprise services (water, sewer, trash). Some communities do not include enterprise fund revenues and expenditures in their budget document, however Salem does so to ensure greater transparency. State Aid The largest category of state aid is for schools, however there are other smaller categories of state funding that the City receives, as well. Other Salem uses excess receipts from City programs like the Witch House and Golf Course to help fund the budget and reduce the amount that must be raised through property taxes. ---PAGE BREAK--- Revenues for Salem’s Budget - 2 Revenues for Salem’s Budget - 2 Budget Snapshot By law, Salem’s City budget must be balanced. That means that the planned expenditures must be equal to the anticipated revenues. Financial forecasting and revenue projections help estimate what the expected funds will be for the coming year. Property Taxes 60% State Aid 20% Enterprise Funds Revenue 9% Local Receipts 10% Other 1% FY2025 Revenue Sources ---PAGE BREAK--- Where your tax dollars go Where your tax dollars go $0.38 Salem Public Schools & Essex Tech $0.18 City & School Employee Benefits $0.13 Public Safety $0.12 Public Works, Roads, Water, Sewer, Trash $0.05 State Charges $0.05 General Government $0.04 City & School Debt Service $0.02 Recreation & Community Services $0.02 Other The FY2025 budget totals $204,106,637, a 4.1% increase over last year’s. The City budget is increasing 4.1%, the Schools budget is increasing 4.8%, and the Enterprise Funds budget is increasing 1.9%. ---PAGE BREAK--- Fixed Costs in Salem’s Budget Fixed Costs in Salem’s Budget Fixed costs include debt service, retirement, insurance, and health insurance charges, assessments by the state and other governmental bodies, and contractually required payments. These costs are “fixed” because the City does not have discretion to reduce them. Fixed costs comprise roughly $84 million, which is 41% of the City’s total budget – in other words, about $0.41 of every $1 spent in the budget is on a fixed cost. In FY2025, changes in fixed costs account for about 81% of the budget’s overall increase over the previous fiscal year, the largest amount in over a decade. Fixed costs include debt service, retirement, insurance, and health insurance charges, assessments by the state and other governmental bodies, and contractually required payments. These costs are “fixed” because the City does not have discretion to reduce them. Fixed costs comprise roughly $84 million, which is 41% of the City’s total budget – in other words, about $0.41 of every $1 spent in the budget is on a fixed cost. In FY2025, changes in fixed costs account for about 81% of the budget’s overall increase over the previous fiscal year, the largest amount in over a decade. $18,605,282 $15,809,213 $15,745,106 $10,883,575 $9,007,261 $4,644,596 $3,147,612 $2,430,076 $1,465,528 $912,931 $754,780 $410,806 $345,865 $220,000 Health Insurance School fixed costs Retirement State Assessments Debt Service SESD Assessment Water Board Assessment Essex Tech Medicare Fixed Contracts Fixed Building Costs Worker's Comp Municipal Insurance Unemployment FY25 Fixed Costs ---PAGE BREAK--- 38% 18% 9% 7% 6% 5% 4% 4% 4% 3% 2% 1% Districtwide Supports Salem High School Collins Middle School Heights Saltonstall Bates Bentley Carlton Horace Mann ECC New Liberty Salem Prep FY2025 Salem Schools Budget FY2025 Salem Schools Budget Budget Snapshot Around 64 cents of every $1 Salem spends on schools comes from taxes. The next largest source of school funding is state aid, which comprises about 27 cents of every Over the previous decade, the City’s appropriation for Salem’s schools increased an average of 3.1% per year, but in FY25 it will increase by 4.8%. For FY2025, Salem’s school budget is $80,158,896. This does not include school-related costs that are carried on the “City side” of the budget, like school building project debt, health insurance for teachers and other school employees, and so forth. Personnel 74% Expenses 26% ---PAGE BREAK--- FY2025 Capital Budget FY2025 Capital Budget Capital Project Highlights Capital Project Highlights Signature Park projects Boston Street design Police/Fire/DPW vehicles ADA upgrades Road paving and sidewalks EV charging stations Historic preservation work Willows Pier & Ferry Terminal Artists Row & Old Town Hall Playground upgrades Building energy efficiencies Signature Park projects Boston Street design Police/Fire/DPW vehicles ADA upgrades Road paving and sidewalks EV charging stations Historic preservation work Willows Pier & Ferry Terminal Artists Row & Old Town Hall Playground upgrades Building energy efficiencies Stormwater system improvements Coastal resilience New City website Water system upgrades Trails and safe streets projects Stormwater system improvements Coastal resilience New City website Water system upgrades Trails and safe streets projects Budget Snapshot Capital are tangible assets or projects with a value of $25,000 or more and a depreciable life of 5 or more years. Capital projects and equipment are largely funded from bonds (borrowing). General capital bonds are paid by tax dollars and water/sewer capital bonds are paid by water and sewer ratepayers. Salem currently has its highest bond rating in its history, meaning its interest rates for capital debt is low. This is counterbalanced, however, by rising inflation and material costs. The capital plan section of the budget, Section 7, outlines capital expenditures for FY2025, as well as those planned for future years, how they are being paid for (borrowing, receipts, grants, etc.), and what their long- term impact is projected to be on the regular budget. ---PAGE BREAK--- $252,775 $258,299 $260,631 $283,183 $378,214 $439,407 $449,138 $558,025 $590,754 $593,210 $676,211 $688,009 $703,862 $719,119 $752,656 $939,656 $1,242,164 $1,551,796 $1,665,740 $1,695,134 $1,774,965 $2,581,542 $5,792,249 $6,637,297 $10,610,705 $13,107,284 $80,158,897 Purchasing City Council Sustainability Collector Human Resources Harbormaster Assessors Veterans Finance Legal & DEI Council on Aging City Clerk Mayor's Office Treasurer Health Electrical Planning Building Inspector Library Transportation IT Recreation Public Services Engineering Fire Police Schools Personnel Expenses FY2025 Departmental Budgets FY2025 Departmental Budgets Budget Snapshot The budget presented to the City Council is usually considerably less than the amount originally requested by departments. Each year the administration pares requests down to a level that will ensure a balanced budget based on projected revenues.