Members of the incoming council could see changes on their paycheques come Jan. 1, 2019.
Saanich council next month will consider a staff report that spells out ways in which the municipality could manage pending tax changes that could reduce the net pay of the mayor and councillors.
The pending changes stem from Ottawa’s decision to eliminate the non-accountable expense allowance part and parcel of council’s remuneration. The allowance premised on the assumption that elected officials incurred expenses in the performance of their duties equal to one-third of their pay and Saanich pays mayor and councillor that allowance. By example, it accounts for $34,295 of the mayor’s remuneration of $102,887, and $13,770 of a councillor’s remuneration.
Under the changes, the federal government will start taxing this allowance as income, thereby reducing the net pay of elected officials. The actual effect of this change on each member of council is not clear, because their financial circumstances vary. Also unknown is the amount of deductible expenses that councillors incur each year and how they might impact their actual net pay.
But the report offers two illustrative examples. Saanich’s mayor stands to lose more than $11,073, while the ‘typical’ councillor stands to lose more than $3,500.
The report itself outlines four options for council. It could raise current remuneration levels with the first paycheque of 2019 for council members to retain the same net pay for a total cost of just under $57,000 to taxpayers.
Saanich could also assume officials will have some deductible expenses and gross up current remuneration levels with the first pay-cheque of 2019 to offset the difference.
It could also maintain gross remuneration levels on the assumption elected officials have deductible expenses to offset the increased taxable income. This option would have no financial impact on the municipality.
Finally, Saanich not make any adjustments at all until council implements its council remuneration policy in 2019.
“This would result in [council] receiving the average increase of the comparator municipalities and will ultimately reflect the decisions other communities make with respect to the removal of the tax exemption allowance,” said Valla Tinney, director of finance.
The report itself does not recommend any of the four options.
As of this writing, several municipalities and regional districts across British Columbia, including Kelowna, whose populations similar to Saanich’s and the Capital Regional District, have raised remuneration rates for their elected officials to make up the difference.
Bruce Kennedy with the Grumpy Taxpayer$ of Greater Victoria said his organization hopes Saanich will make no adjustment to gross pay, because it is the “most responsible and transparent way to deal with this change.”
“From our perspective this is the appropriate time to find out exactly how much our elected officials are spending on expenses,” he said. “It was a poor practice from the onset to simply provide any group with taxpayer’s money with no requirement to be accountable for the money being spent.”