Council postpones stipend increase decision to New Year
Public provides input, suggestions on stipend increase
A 2004 council motion has forced the municipality to postpone its decision on whether or not to increase councillor stipends to make up for changes to the Federal Income Tax Act.
Effective Jan. 1, 2019, councillor stipends become fully taxable. Previously, one-third of a councillor’s stipend was tax-free. Council hoped to make its decision at the Dec. 19 special meeting which invited public comment on the matter. However, Warden Bruce Morrison announced the discovery of a motion carried at the Jan. 5, 2004 council meeting, stating that Council stipend increases are to coincide with increases received during Union negotiations. The Warden introduced a motion on Dec. 19 to rescind the 2004 motion so that the increase in council stipend will no longer be tied directly or indirectly with union negotiations. Council will vote on the motion at the Jan. 7, 2019 meeting.
In anticipation of the upcoming stipend decision, Chief Financial Officer Alix Redden reviewed three options for councillors to mull over: 1) no change to the gross stipend resulting in a decrease in take home amount, 2) increase the gross stipend amount by 12% to maintain current take home amount, or 3) defer the decision to budget deliberations for fiscal 201920.
Current gross annual stipend amounts are as follows (percentage change in take home pay as a result of the tax change follow in brackets): Councillor - $20, 892 (-13% for councillors with CPP deduction, -11.7% for councillors w/o CPP deduction), Deputy Warden $22,440 (-12.7%), Warden - $37,916 (-15%).
Increasing the gross stipend amount by 12% results in the following percentage change to take home pay: Councillor - $20, 892 (-0.6% for councillors with CPP deduction, 1.6% for councillors w/o CPP deduction), Deputy Warden - $22,440 (-0.4%), Warden - $37,916 (-3.4%).
A 12% increase would cost the county $5,571 for the remainder of fiscal 2018-19 and $22,285 for fiscal 2019-20 and onward.
Warden Bruce Morrison said he would have preferred the tax changes to come at the beginning or end of councillor term rather than mid-term. Councillor Paul Macneill suggested the tax change would be a good opportunity to review the remuneration of elected officials across Canada. Councillor Merrill Macinnis expressed concern that a decrease in gross stipend amount might discourage people from running for office.
Baddeck resident Norman Matheson questioned a stipend increase at a time when so many constituents are facing financial hardships.
Retired chartered accountant Merrill Buchanan of Baddeck spent his career working for a crown corporation. He commended council for welcoming public input on the matter. He does not believe a stipend increase to address the income tax change should be acceptable to councillors, nor does he believe it will it be acceptable to the general public. He offered a two-pronged approach to addressing the current circumstances.
The previous non-taxable portion of stipends was provided for “non-accountable” and “non-reportable” expenses, both phrases Buchanan referred to as “red flags” in this day and age. Buchanan believes his approach will “lead to a much more defendable and supportable basis for a fair and appropriate adjustment to the stipend.”
Firstly, to offset some or all of the tax impact resulting from the income act tax changes, Buchanan proposed that expenses duly incurred by councillors continue to be reimbursed by the municipality. Qualifying expenses should be determined with necessary amendments made to expense policies. Transparent disclosure of expenses should be maintained.
Secondly, he proposed a thorough review of stipends paid to councillors in the municipality including research by an independent group to compare municipal stipends across the province.
The next meeting of Victoria County Municipal Council will be held at the Court House, Baddeck, on Monday, Jan. 7, 2019, beginning at 5:00 p.m. Discussion of council stipends is on the agenda.