Springfield Payroll Tax Work Moves Forward, Chamber Offers Perspective

The Springfield City Council advanced its payroll tax discussion during a special session and public hearing Monday night, voting unanimously to direct city staff to begin developing a detailed proposal for council review.

While the action does not implement a tax, it marks the next formal step in a multi-month process to evaluate the concept, understand its projected revenue impact and operational requirements, and determine whether it will ultimately move forward. At the hearing, Springfield Area Chamber of Commerce President and CEO Vonnie Mikkelsen testified in front of Springfield city councilors, expressing the Chamber’s support for a balanced fiscal plan that protects essential services without eroding competitiveness.

In Mikkelsen’s words, “the Chamber is open to the shared payroll tax at the rate currently proposed, 0.1 percent for employers and 0.1 percent for employees, and we support applying those percentages to gross payroll and gross wages. That design choice already moves the revenue outcome above the original Task Force revenue target of $2.4 million, so we are amenable to what amounts to an effective increase. But we are not supportive of any unnecessary expansion of the tax rate beyond what is proposed now.”

Purpose of Monday’s special session and public hearing
Monday’s meeting served a specific purpose: to provide direction to the City Manager on whether to continue development of a local payroll tax framework. With the council’s unanimous passage of the resolution, staff are now authorized to refine the methodology, prepare updated financial modeling, and bring a more complete proposal back to the council for deliberation.

What’s next
With the resolution approved, the City Manager and staff will begin assembling the details of a payroll tax concept for council work sessions in the first half of 2026. Those sessions will serve as the primary venue for council to examine the structure, rate, compliance considerations, and administrative requirements of the tax.

If council ultimately approves an ordinance later next year, the earliest possible implementation date would be January 1, 2027. Under the projected timeline, the first two quarters of 2026 would be devoted to council deliberation; the second two quarters would focus on outreach and technical preparation with employers, payroll processors, and business service providers to support rollout in 2027.

Separately, any potential service reductions identified by the city’s Fiscal Stability Task Force – such as changes to the library budget – would move through the standard Budget Committee hearing process in May and June, allowing for public comment and community input before decisions are finalized.

“The Chamber supports a balanced fiscal plan that protects essential services without eroding competitiveness. We can support the payroll tax at the current rate, on gross wages and payroll, with strong guardrails, but we urge you to be firm against unnecessary expansion.”

– Vonnie Mikkelsen, President and CEO, Springfield Area Chamber of Commerce

The Chamber’s perspective
Speaking as both a Springfield resident and employer, Springfield Chamber President and CEO Vonnie Mikkelsen shared measured optimism and clear priorities on behalf of nearly 800 Chamber members. “Because this hearing is specific to the payroll tax, I want to be direct about our position… Springfield has to pair short term stabilization with long term growth.” A payroll tax may help close an immediate budget gap, she noted, but “it cannot replace the structural solution of growing Springfield’s tax base through business retention, expansion, and development.” She also cautioned against increasing the rate over time, warning that “if the payroll tax rate keeps rising, it begins to work against the growth we need for real fiscal sustainability.”

She further highlighted the cumulative pressures employers are already facing – from the corporate activity tax and paid leave to transit payroll and transportation taxes, regulatory costs, and inflation-driven wage increases – underscoring the importance of thoughtful timing and design.

In closing, Mikkelsen called for strong guardrails should the council advance the tax: voter protection for any future rate increase, transparent reporting, simple administration, adequate implementation notice, and reinvestment of any surplus into community and economic vitality priorities. “If you advance this proposed rate, guardrails are essential,” she said.

The Chamber will continue to emphasize the importance of long-term economic development as the most sustainable path to addressing the city’s cyclical budget challenges. While the payroll tax discussion moves forward, they remain focused on advocating for policies that grow jobs, strengthen Springfield’s business climate, and ensure future revenue stability through economic expansion – not through the reliance on ever-increasing costs to employers and employees.

To read the full, detailed Springfield Chamber letter on the payroll tax discussion submitted ahead of the hearing, read the Chamber’s Perspective here.

More About the Springfield Chamber’s Business Advocacy Efforts
As a trusted convener and provider of business resources, the Springfield Chamber is committed to fostering policies and incentives that contribute to our competitive position in private sector job creation, retention, and economic growth. The Chamber recognizes the systemic interdependencies of a healthy economy and provides an ear and a voice for local business at the confluence of government, commerce, and community. Through a robust platform of member advocacy services, the Chamber advocates for business by increasing visibility, dialogue, and representation at local, state, and federal policy circles around issues of impact and interest to their members.