Information and Timeline
On June 1, 2026, the Springfield City Council adopted 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 an overview of what Council approved, key implementation details, and what happens 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 payroll tax is intended as an incremental step toward long-term fiscal stability, not a complete solution.
What Council Approved
On June 1, 2026, City Council adopted an ordinance that:
- Establishes a Springfield Payroll Tax Code in the Municipal Code.
- Creates a payroll tax shared by employers and employees.
- Budgets revenues in a separate, identifiable fund.
- Includes reporting and review requirements.
The ordinance establishes the framework for the tax. Administrative rules will govern day-to-day program details.
What Rate Did Council Approve?
Council approved the Fiscal Stability Task Force recommendation:
- 0.1% (one-tenth of one percent) paid by employers.
- 0.1% (one-tenth of one percent) paid by employees.
Who Pays?
Employers
- Employers with a physical presence inside Springfield city limits pay 0.1% of wages paid to employees.
Employees
- Employees who work for an employer located in Springfield pay 0.1% of their wages.
Employers will withhold and remit the employee portion through the normal payroll process. Employees do not need to file anything or take any action.
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 may vary based on:
- Economic conditions
- Employment levels
- Wage levels
- Timing of implementation
What Guardrails Are Included?
The adopted 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 Happens Next?
While the ordinance has been adopted, implementation work remains before collection begins.
Next steps include:
- Development of administrative rules
- Employer outreach and education
- Establishment of reporting and remittance procedures
- Program administration and compliance system
- Determination of the tax collection start date through administrative rule
Importantly: The ordinance specifies that collection may begin no sooner than January 1, 2027.
Timeline
- February 2, 2026: Work session, ordinance review and feedback
- April 6, 2026: Public hearing and first readingÂ
- June 1, 2026: Council adoption and final readingÂ
- July 2026: Ordinance becomes effective following Mayoral approval
- 2026-2027: Administrative rule development and employer outreach
- 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 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 is one tool among several being used to address long-term financial stability. Other elements of the City’s broader fiscal framework include cost containment, economic development, and legislative advocacy identified through the Mayor’s Fiscal Stability Task Force.
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This page will be updated as new information becomes available.
