Rather than suffering a loss of income, Red Deer city council will consider raising councillors’ salaries by more than 13 per cent and Mayor Tara Veer’s salary by more than 18 per cent next month.
There was no discussion around the council table on Monday when councillors voted to table recommendations made by administration on how they could avoid an income loss resulting from changes to the Federal Income Tax Act.
As of Jan. 1, there will be no more legislation allowing elected officials’ salaries and allowances to be one-third tax free.
When Red Deer councillors and the mayor have to start paying taxes on all of their pay and allowances, instead of just two-thirds, collectively, they will be receiving $59,000 less in actual compensation a year.
According to data provided in the council agenda, councillors’ and the mayor’s gross salaries would have to go up significantly to keep their take-home pay the same after taxes.
Councillors will discuss increasing their salaries to $68,618 from $60,466.
They will also discuss increasing the mayor’s total annual salary to $131,940 from a previous $112,198.
This kind of “grossing up” adjustment is being made by other communities, including Strathcona County, Medicine Hat, Kelowna, Grande Prairie and Wood Buffalo, and most recently, Lacombe and Lacombe County, said Kristy Svovda, the city’s director of human resources.
The one-third tax-free allowance was introduced in 1947 as “an allowance for expenses incidental to the discharge of the person’s duties as an elected officer.”
By 2012, the province of Alberta removed this perk for MLAs and ministers. Some municipalities began making salary adjustments in 2017, while others, including Red Deer County, Lethbridge and Airdrie, are still considering their options.