Council presented with pay dilemma

by Avery Zingel - June 19, 2018

Administrators are recommending the city hire a consultant to study and make recommendations on councillor compensation as CRA taxation rules come into effect.

City senior administrative officer Sheila Bassi-Kellett says taxation must be addressed “right off the bat.”
Avery Zingel/NNSL photo

Starting Jan. 1, 2019, a one-third tax exemption on elected official’s salaries will be eliminated.

Sending any discussion on councillor’s compensation would preferably go to a committee, said councillors Adrian Bell and Julian Morse.

However, the city is expecting to declare its pay scheme by the end of September, leaving no time for a committee-style deliberation.

Administration recommended council contract out expertise to give recommendations on councillor compensation. Last time council discussed pay, the discussion went to a committee.

Both Bell and Morse stated their preference for a committee decision, if not for the time constraint to make a decision this fall.

There will be time for public input, said senior administrative officer Sheila Bassi-Kellett.
The City of Whitehorse decided its compensation last year, said Morse.

“My preference is that on these issues that we don’t address them on a last minute basis. We don’t have to be crunched for time on this,” said Morse.

Having time for public consultation is appreciated, he said.

Alongside a base salary, municipal offers are currently entitled to an allowance equivalent to 50 per cent of their salary.

If the city makes no effective change to its compensation scheme, councillor’s pay will default to 100 per cent taxation, resulting in a pay cut.

“That is an issue we need to address right off the bat,” said Bassi-Kellett.

“We do have the opportunity to refresh and put a new lens on remuneration overall,” she said.

Administration is recommending that the consultant analyze options for pay schemes, possible increases and practices for other municipalities across the country.

Council would likely have four options, three of which involve a net reduction in take home pay, states the memo presented to council.

There is urgency to confirm how the city will approach compensation to give new council candidates a “clear understanding” of what to expect, the memo states.

Compensation will be relevant to the city’s budgeting process and come 2019, the city will be forced to reckon with the new CRA rules.

Any mechanism for pay increases “will ensure that members’ salaries remain reasonable and appropriate,” the memo states.

The city is rushed to meet 2019 deadline but adaptation to the new rules began much sooner in other jurisdictions.

Federal politicians lost their tax-free status in 2000. Calgary city council and its school board eliminated the rule in 2006 and Alberta MLA’s lost eligibility in 2012.

In August 2017, Edmonton city councillors took a pay cut in light of the new CRA rules, while councillors in nearby Strathcona County reluctantly voted to raise their own pay in a 6-2 vote, resulting in identical take home pay under new CRA rules.

Ontario removed the exemptions in 2001, said Scott Hanick, vice president of the Canadian Taxpayers Federation.

Taxation rules and municipal allowances were implemented in the 20th century at a time when politicians didn’t have expense accounts and up to half of their salary was considered tax free.

“In fact there are very few places left that this federal tax change affects,” he said.