Red Deer City councillors (from left) Tanya Handley, Ken Johnston and Michael Dawe at a recent council meeting. Red Deer council was among those that recently tackled whether to increase salaries to compensate for federal tax changes that would have cut take-home pay. Red Deer Advocate file photo

Councils pondering pay increases

Councils taking different approaches to dealing with federal tax changes that would mean pay cuts

Central Alberta municipalities are taking different approaches to the awkward question of whether to increase council pay to offset federal tax changes.

As of Jan. 1, a one-third, tax-free portion of salaries for councils, commissions and other bodies of elected officials is being eliminated by the federal government. That means a significant cut in take-home pay, unless they top up salaries to compensate.

For councils, voting to increase their own pay is often a sensitive issue.

A Red Deer Advocate poll found 92 per cent of respondents were against Red Deer city council’s plan to increase salaries to keep take-home pay the same. The move passed narrowly 5-4 last week.

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Around Central Alberta, others had already topped up their salary before Red Deer’s politicians tackled the issue. The Town of Blackfalds, city and county of Lacombe and Red Deer Public School Board had made the adjustment.

The Town of Sylvan Lake voted to lift its salaries on Nov. 26, the same night the City of Red Deer’s council did.

Joanne Gaudet, town communitions officer, said council was well aware the compensation issue was proving controversial in some communities.

“We were cogniscent of that,” said Gaudet.

To get an outside opinion on the issue, the town turned to the members of its 2016 Citizen Council Remuneration Committee. That committee recommended boosting the Sylvan Lake mayor’s salary by 30 per cent and councillors’ pay by 24 per cent after finding compensation had lagged far behind other similar communities. The increases did not kick in until after the fall 2017 election.

On the federal tax exemption question, committee members decided that it was “not appropriate for council to personally absorb a net wage decrease because of a federal decision,” says a report to council. Adjusting pay was “warranted,” the committee concluded.

Gaudet said having that arm’s length opinion helped council’s decision making.

“I think that kind of took a lot of the debate out of it,” she said, adding council mostly talked about their unhappiness with the federal government’s decision and its timing midway through the council term.

Mayor Sean McIntyre voted against the increase, preferring to deal with the decision in a future compensation review.

Sylvan Lake also looked at what other comparable communities — Stony Plain, Strathmore, High River, Beaumont, Lacombe, Cold Lake and Camrose — were doing. At the time, five of seven had increased their pay and two were still reviewing it.

The Town of Olds council has also voted to boost honorariums by 14 per cent in its 2019 budget.

“This impacts the town budget by $25,680, and is purely an increased cost on income tax payable to the federal government,” said Doug Wagstaff, director of community services.

Town of Stettler chief administrative officer Greg Switenky said they are still reviewing their options. Those options include doing nothing; increasing remuneration by 11 to 14 per cent to keep take home pay the same; or choosing a lower percentage increase, but making other expense changes.

A decision will be made as part of 2019 budget deliberations this month.

The Town of Ponoka is putting its own spin on how to deal with the prospect of a council pay cut.

Administration is recommending that the one-third portion of a council member’s pay that was tax free be boosted by 15 per cent.

“The intention is to recognize or offset the reduction in net income that the council members will incur,” said town communications officer Sandra Smith. If approved, council members will not see their pay cut completely offset, but the impact will be reduced.

Council will debate the issue on Dec. 11.



pcowley@reddeeradvocate.com

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