Cherriots’ proposed employer payroll tax is not dead. It is on hold.
That is the key takeaway after the Salem Area Mass Transit District Board of Directors voted June 25 to pause the work of its Business Coalition Task Force, delaying any action on a proposed tax that would place a new payroll cost on local employers.
The task force had been created to discuss Cherriots’ long-term growth plans with local business groups after the district floated an employer payroll tax as a possible funding source for expanded bus service.
In a response to Salem Business Journal, Cherriots General Manager and CEO Allan Pollock confirmed the proposal remains under consideration.
“The employer payroll tax is still under consideration but is on hold until the Board decides next steps related to the task force,” Pollock said.
Cherriots’ initial proposal was a 0.7% employer payroll tax rate. Pollock said the board was open to modifying the rate based on discussions with the business community, but the board would ultimately decide the final rate after further discussion with businesses and the broader community.
That means local employers are not facing the tax immediately, but the proposal remains on the table.
“At the June 25th meeting the board voted to pause the activities of the business coalition task force while the District evaluates next steps to advance long-term growth and meet the needs of the community,” Pollock said. “The Board will consider next steps once the new general manager is on board.”
The pause also means Cherriots’ planned service expansion will not move forward in fiscal year 2027.
“As a result of this pause, no service enhancements will be implemented in fiscal year 2027,” Pollock said. “The District cannot implement the service enhancement plan until a new sustainable revenue source is identified and implemented.”
The district’s service enhancement plan had included future improvements such as more frequent buses, longer service hours and expanded service options. Those improvements are now delayed unless Cherriots finds a new funding source.
For current riders, the decision does not mean existing routes or schedules are being cut.
“The pause in the discussion and/or the delay in implementing an employer payroll tax does not impact current Cherriots service levels,” Pollock said. “It does mean that no service enhancements will be implemented. The District currently lacks the sustainable revenue required to increase service levels.”
For businesses, the issue remains unresolved. The proposed tax is not moving forward right now, but Cherriots has not taken it off the table.
The board is expected to revisit the issue after a new general manager is in place. Until then, Salem-Keizer’s bus expansion plans remain delayed, and the question of whether local employers will be asked to pay for them remains open.
