Information and Timeline
The Springfield City Council is considering a payroll tax ordinance as one component of a broader effort to address the City’s long-term General Fund structural imbalance.
This page provides a clear overview of what is being considered, what has been decided, what has not been decided, and what comes next.
Why This Is Being Discussed
Springfield’s General Fund has experienced long-term financial pressure due to constrained property tax growth and rising service delivery costs.
In 2025, the Mayor convened a Fiscal Stability Task Force to evaluate the City’s financial outlook and recommend strategies. After nine weeks of review, the Task Force identified a shared payroll tax as one of several tools to begin addressing the structural imbalance.
The proposed payroll tax is intended as an incremental step toward long-term fiscal stability, not a complete solution.
What Is Being Considered
City Council is considering an ordinance that would:
- Establish a Springfield Payroll Tax Code in the Municipal Code.
- Create a payroll tax shared by employers and employees.
- Budget revenues in a separate, identifiable fund.
- Include reporting and review requirements.
The ordinance establishes the framework for the tax. Administrative rules would govern day-to-day program details.
What Is the Proposed Rate?
The Fiscal Stability Task Force recommended:
- 0.1% (one-tenth of one percent) paid by employers.
- 0.1% (one-tenth of one percent) paid by employees.
Council has not yet finalized the rate. Final rate discussion is scheduled for April 6, 2026.
Who Pays?
If adopted as proposed:
Employers
- Employers with a physical presence inside Springfield city limits.
- Pay 0.1% of wages paid to employees.
Employees
- Employees working for employers located in Springfield.
- Pay 0.1% of wages earned.
Employers would withhold and remit the employee portion through standard payroll processes.
Who Does Not Pay?
- Employees who live in Springfield but work outside the City would not pay the tax
How Much Revenue Is Projected?
The Task Force identified a funding goal of approximately $2.3 million annually to support the General Fund.
Actual revenues will depend on:
- Final rate adopted.
- Final wage definitions.
- Economic conditions.
- Employment levels.
Revenue estimates will be updated prior to final Council action.
What Guardrails Are Included?
The proposed ordinance includes multiple accountability measures:
- Separate Fund: Payroll tax revenues would be budgeted and accounted for in a separate, identifiable fund.
- Annual Reporting: An annual public report to City Council on program performance and revenue impact.
- Rate Stability: No rate increases or structural changes for the first three years after collection begins.
- Formal Review: A comprehensive review beginning in Fiscal Year 2030 to evaluate effectiveness and impact on the General Fund structural imbalance.
- Council Action Required for Changes: Any future rate changes would require Council action through ordinance.
What Has Not Been Decided
The following items are still under Council consideration:
- The final tax rate
- Final technical definitions related to wages
- Administrative rule details
- Any future budget adjustments
Importantly: Decisions regarding potential service reductions are made through the City’s annual budget process, which is separate from the payroll tax ordinance discussion. No specific service reductions have been adopted as part of this ordinance.
Timeline
- February 2, 2026: Work session, ordinance review and feedback
- April 6, 2026: Work session, final rate discussion. Public hearing and first reading (Regular Session)
- April 20, 2026: Second and final reading (Regular Session)
- Effective Date: 30 days after adoption and Mayoral approval
- Earliest Collection Date: No sooner than January 1, 2027
- FY 2030 Review: Formal program review and public report
How This Relates to the Budget
The payroll tax is designed to provide a new revenue stream to support General Fund services.
The City must adopt a balanced budget each year. Budget deliberations occur through a separate public process involving:
- Budget Committee review
- Public comment opportunities
- Council adoption
The payroll tax, if adopted, would be one tool among several used to address long-term financial stability.
Stay Informed
Quick Overview
Full Legislative Materials
Meeting Recordings
This page will be updated as new information becomes available.
