SALEM — City leaders are grappling with COVID-19-triggered budget struggles to address a roughly $8 million gap that's anticipated in the upcoming budget.

Cuts are likely, and tax increases can be expected.

The City Council and mayor held their annual budget retreat this past weekend. It was held remotely, continuing from a distance an annual tradition that clues the council in on what the city's new budget looks like ahead of a formal presentation. The full meeting video can be viewed and downloaded from

This year, the outlook is grim. Local receipts — parking fees, pot revenue, etc. — are forecast to be down $3.2 million, and state aid is expected to be $5.2 million lower, for a total in lost revenue of $8.4 million to start fiscal 2021.

"Closing this gap will require a combination of budget cuts, use of savings and enhancement of revenues," Mayor Kim Driscoll said during the presentation.

Then addressing the newly-elected city councilors in the group, she added: "This is going to be a humdinger for your first year, I've gotta say."

What could've been

Going into 2020, the city was on solid financial footing.

"The year, from an economic perspective, was going well. I think folks were excited about the tourism season. We had seen some strong new growth. There was definitely low unemployment," Driscoll said.

But now in the midst of the pandemic, all major revenue sources have been affected, she said. "Hotels, meals, cannabis, parking, just about every item outside of property taxes have had major revenue downturns for us."

While other communities have taken some drastic measures to close out the current year's budget — Peabody has laid off 30 part-time employees and is poised to lay off 70 more, Newton has had about 50 layoffs and Brookline twice that number — in Salem, Driscoll said, spending has been frozen but no one has lost a job so far.

"Because we had such a strong year revenue-wise, we were able to keep people on the payroll this year," she said. "I can't necessarily say that's going to be in place for next fiscal year, but we've put the slow freeze on, looking to save every dollar we can."

But expenses are projected to increase for 2021. A level services school budget, for example, would need a 4.5% increase in spending. Driscoll told the department to start with a 2% increase instead.

Raising taxes, she said, would be an easy way out. The city has avoided taxing to the maximum that it can, with $4 million in "excess levy capacity" — what the city could increase taxes by without triggering a Proposition 2 1/2 override — at its disposal.

New growth would help

Driscoll also took the opportunity to push back against opposition to new development in the city. She noted past years where new construction projects turned properties that weren't paying much in taxes into six-figure income producers, which reduced the tax burden on residents.

"I believe in a pro-growth strategy, a smart growth strategy, to help offset costs, to help turn underutilized properties into properties that produce revenue, that are cleaned up," she said. 

New growth is one option in contrast to raising taxes and cutting services, according to Driscoll. This was after a suggestion from Ward 7 Councilor Steve Dibble to make it a goal to not raise taxes.

"I never hear anybody say 'reduce services.' 'Don't fully fund police.' 'Leave fire a little short.' 'You know Public Services? We don't need more people. We don't need to do all those sidewalks,'" Driscoll said.

Toward the beginning of the retreat, City Council President Bob McCarthy provided a warning shot to his colleagues.

"Where are your priorities?" McCarthy asked. "We all like to sit here and play to the camera, so to speak, during the budget, and some people don't like to vote for the budget if it's too much of an increase.

"Something has to give," he said, "and the question is: Where are your priorities, and what do you believe can give?" 

Addressing what is coming

Ward 5 Councilor Josh Turiel suggested pausing on some capital projects, such as the ongoing multi-million dollar project that's still in design to replace the pool at Forest River Park.

Ward 4 Councilor Tim Flynn, meanwhile, suggested an early retirement option for city workers and easing up on repaving streets and sidewalks that aren't in as bad shape as others.

"To save jobs, you have to save the money," he said. "For every action, there's a reaction. We've got kind of a bare bones staff city-wide. You can't really lose people to still provide the same level of services."

Late into the meeting, Flynn further suggested councilors take a pay cut. As it stands, they earn 10% of the mayor's salary, which is $150,000. Flynn, a fire department lieutenant, isn't able to take the pay.

"Even if we can save a little bit of money, it might save a program," he said. "It might help save a part-time job."

Contact Salem reporter Dustin Luca at 978-338-2523 or Follow him on Facebook at or on Twitter @DustinLucaSN.

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