Some ways you can attract more and better submissions include:
1) Attach an extra payment (say $10) to the best poem and/or story in each issue. You can pick it yourself, but letting your readership vote on it will get them more involved.
2) Attach a somewhat bigger payment (say $20) to the best poem and/or story of the year. That one you want to let people vote on for sure.
3) Put a PayPal donation button after each poem or story. Split the proceeds with the author. (If you notice certain authors consistently drawing higher donations, buy more stuff from them: they're pleasing your audience.) This encourages audience participation, generates money for your magazine, and effectively raises pay rates without it coming out of your budget. The Lorelei Signal has gotten great results from this.
4) Join some organizations and talk about them in the magazine. Good choices include the Science Fiction Poetry Association, Broad Universe, Carl Brandon Society, and Horror Writers Association. It'll catch the eye of fellow members and encourage them to submit to your magazine.
5) Look up a bunch of awards that have entry requirements your magazine could meet. Frex, the Rhysling Award for speculative poetry accepts nominations from all SFPA members. You can't nominate your own poem, but you can nominate one you bought as an editor! The James Tiptree, Jr. Award for gender issues in speculative fiction is one that explicitly encourages editors to submit noteworthy stories they've published. Follow the guidelines and nominate poems and stories from your magazine. Also do occasional features about an award whose nomination period is approaching, and encourage your audience to participate. This doesn't cost you a dime but helps attract attention -- especially if one of the items actually wins. Always make a big deal of announcing award-related news.
6) If you sell advertising, offer free ad space to contributors. Keep ads together and relevant to your magazine's topic, so they're not in readers' way, and they're actually useful to your readers as well as an asset to your budget.
7) Mention in your submission guidelines that you do all these things. The chance of making extra money, earning "best of" recognition, or getting an award nomination may hike your magazine above others in the "token payment" category.
8) Keep an eye on your budget. Most magazines don't make money, especially at first. If/when you start turning a profit, roll some of it back into the magazine by boosting your pay rates. Higher pay helps attract better, more experienced contributors.
9) Network with enthusiasm. Encourage contributors to link back to your magazine if they announce elsewhere that their work has been published. Set up an email list which is open only to your magazine's staff and contributors, where you can post calls for submissions and where contributors can talk about upcoming projects. Strange Horizons has an especially good contributors' list. This encourages authors to keep sending you new stuff. Offer a simple flyer that people can print out to put on freebie tables at conventions or other events -- and include a space where authors can write in the title of their item that you published.
10) Treat all authors as potential professionals. If you expect great things of them, most will live up to your expectations. Be polite, respectful, and encouraging. If you have time to give feedback, even a few words can make a big difference. (This is an absurdly easy way to rack up huge amounts of brownie points, because many editors are rude or dismissive to writers.) Especially watch for "almost good enough" submissions and encourage the author to try again. An author who makes their first sale to you will almost always keep submitting to your magazine ... and will gain experience and quality over time.