The salary structure for members of council approved last year will continue through this term.
Back in September of 2017, members of council essentially voted themselves a raise to account for the federal government removing an exemption that rendered one-third of their salary tax-free.
The exemption will be eliminated as of next year and will result in members of council paying their “fair share” of taxes, according to a background report prepared Treasurer Laura Barta that was included on the agenda for Monday’s (Dec. 10) meeting of the finance committee.
The tax exemption was designed to cover the expenses incurred by members of council.
“Members of council are required to attend meetings, attend local events within the township, sit on local boards, and deal with constituent issues. Many issues are dealt with from their home as office space and administration staff assistance is currently limited. The cost of travel within the township, telephone service, cellular phones service, internet connections, computer equipment, stationary, and other required supplies has always been the responsibility of the individual council member. In the past, it was assumed that the one-third tax-free exemption was designed to cover these costs and council members were not required to track their costs or otherwise justify that the exemption was reasonable,” the background report reads.
“With the elimination of the one-third tax-free exemption, members of council will be required to track actual expenses related to the performance of their public duties. This will include a log of all mileage within the township travelled on Township-related business as well as a detailed accounting of all expenses including the purchase of computer equipment and other required services. This extra tracking is the same as that required of all employees who claim employment-related expenses. Proof of expenditures is required before a nontaxable reimbursement can be made or before income tax deductions can be taken for employment related expenses.”
Three potential options were presented, each with varying levels of estimated cost to the Township (see below). Members of council chose to increase the salary for each position effective this month while leaving expense allowances intact, which will have an impact of almost $37,000.
“The take-home salary for each member of council stayed the same,” CAO/Clerk Thom Gettinby told the current crop of local politicians at Monday’s meeting.
As chair of the finance committee, Ward 3 Councillor Walter Schummer unsuccessfully tried to spark a debate on the issue.
“I’m not in favour of the decision that was made,” he said, noting that he feels that Option 2 was the “fairest” for members of council and local taxpayers.
Despite those objections, the report – which noted that the increase would remain in effect for the balance of the term – was received for information.
In a social media post, Coun. Schummer noted that he was “disappointed” that his colleagues didn’t speak to the issue.
“I don’t feel that the raise is proper or fair to the taxpayers and residents of Brock. A person is truly lucky to be able to arbitrarily increase their salary to compensate for tax changes. I feel that the option recommended by staff (Option 2) was the way to go. But instead Council will now receive increased salaries that will see Brock taxpayers on the hook for over $36,000 annually.”
These are the three options presented to council in September of 2017:
This option would leave the existing level of compensation intact and require members of council to track their respective expenses incurred in the performance of their public duty. The amount of expense allowance currently budgeted for the mayor ($4,000) and councillors ($2,500) would remain available to them however the reimbursement would only be paid by submitting detailed expense claims.
Using option 1…members of council would take home less after tax and the Township would incur additional costs in excess of $6,184 annually. These calculations are based on the 2017 tax and Canada Pension Plan contribution rates that are subject to change annually. it is also important to note that the estimated expense reimbursement may fluctuate depending on the activity of individual members of council.
This option would leave the existing level of compensation intact as well as paying the existing level of expense allowance without the one-third tax exemption. Members of council would be encouraged to track their respective expenses incurred in the performance of their public duty as these costs could be claimed to reduce their taxable income when they prepare their personal income tax returns annually.
Using Option 2…members of council would take home less after tax and the Township would incur additional costs in excess of $9,385 annually. These calculations are based on the 2017 tax and pension rates that are subject to change in future years.
This option would increase the level of compensation paid to members of Council while leaving the existing level of expense allowance intact. Members of council would be encouraged to track their respective expenses incurred in the performance of their public duty as these costs could be claimed to reduce their taxable income when they prepare their personal income tax returns annually.
Using Option 3…members of council would take home the same level of compensation after tax and would have the option of increasing their total retained by claiming actual expenses incurred. The Township would incur additional costs in excess of $36,763 annually. These calculations are based on the 2017 tax and pension rates that are subject to change in future years.
To permit members of council to claim employment-related expenses on their personal income tax returns as recommended in options 2 and 3 above, members of council will be provided with the required authorization by the Township Treasurer annually. Should they choose to exercise this option, they could potentially increase the actual amount of the earnings they retain.