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Council reverses decision on salaries

Posted on March 20, 2019 by Taber Times

By Trevor Busch
Taber Times
tbusch@tabertimes.com

Reversing a previous decision to take no action, town council has now voted to compensate themselves in full for the federal government’s elimination of a one-third tax exemption for elected officials.

Under previous federal tax law, such an allowance amounting to more than one third of the official’s salary plus allowances qualified for a federal exemption. Introduced in 1946, the exemption was extended to municipally-elected officials in 1953. Federal legislation (Bill C-44) passed in 2017 eliminates this tax exemption effective Jan. 1, and has resulted in “substantive changes to after tax compensation” for elected officials.

The decision was left up to each individual municipality if or how they might act to counteract the effects of the change.

Following initial discussion on Dec. 17, town council had voted 6-1 to take no action and accept the change in one third federal tax exemption. Upon the request of individual councillors, the issue would later resurface for discussion at their Jan. 14 meeting, where council voted 6-1 to re-address the federal tax exemption for elected officials with a two-thirds majority vote. On Jan. 28, council would vote 4-1 to bring back the matter for closed session discussion at a subsequent council meeting.

At the conclusion of closed session at the Feb. 11 meeting, council passed a resolution to compensate elected official’s salaries in full. According to the minutes of the meeting, the vote was not unanimous.

“I think there was some confusion on that,” said Mayor Andrew Prokop in an interview following the Feb. 11 decision. “I think you saw that when there was a brief discussion and it was taken for information. I had council come to me — the majority of council come to me — and make sure they were able to discuss this again further. When that happens, in all fairness, I don’t really have an option but to accommodate those kinds of requests.”

Essentially, the Feb. 11 motion requires municipal taxpayers to compensate council salaries for what the federal government is taking away.

“Initially it was for an informational format — that’s probably where that came in — and we thought there was going to be a little bit more discussion on it, so that’s what prompted all that,” continued Prokop. “Basically we voted in favour of going that route to make it up — a lateral equivalent, if you will, or an equilibrium balance. It’s an increase, but it’s related to the tax requirements that they have now taken away, that had been around since the ‘50s. For whatever reason, the federal government decided to disband that method. The big one is, other provinces we’ve checked with — Nova Scotia, Ontario, and British Columbia — did it in its entirety, the same decision. There was also a number of the municipalities checked within the province here, and the majority ended up doing the same thing that we ended up doing.”

The resolution did not include the subsequent financial implications to the municipality moving forward in 2019. The Times requested this information from administration, but due to the strictures involving information released following a closed session discussion, media decided to put the question directly to town council at their March 11 meeting.

“Ultimately, it should be a council motion — if all of council agrees — that you’re directing administration to provide information out of closed session to any member that wasn’t here during the closed session discussion,” said CAO Cory Armfelt during the March 11 meeting. “So that would be direction from council as a whole.”

Coun. Garth Bekkering would caution council against agreeing to provide information publicly that had been discussed under an in camera exception.

“It seems to me that information coming out of closed session regarding budget implications that Mr. Busch has requested, I think is perfectly proper… but I think we should leave it at that. I don’t think Mr. Busch should get all the information coming out of closed session.”

Prokop believed that more information about the decision’s financial implications for the municipality still needed to be weighed before making the information public, but Armfelt suggested this wasn’t entirely accurate.

“Not necessarily on this item. We will be discussing, the first part of that conversation is actually going to be the end of March, and then the beginning of April, to talk over where the assessment is at, because it is coming in lower than we expected, which has an implication to the tax rate. But for the portion of the financial impact and the percentage increase to keep council’s salaries at par given the change to the tax legislation, that is in hand. We know the percentages, and we know the value of that. So that can be provided, and I believe that is the information that The Taber Times is looking for. However, your administration would like to have that passed by a motion, that that information is passed publicly.”

After this explanation on March 11, Bekkering put forward a motion which was passed unanimously by council that the media be supplied with the budget implications for the recent decision of council regarding their own remuneration.

During an interview following council’s Feb. 11 decision, Armfelt confirmed that in practice council’s salary decision has not yet been implemented by the municipality in anticipation of upcoming operating budget changes to be deliberated in late March or early April due to a lower-than-expected municipal assessment in 2019.

“They’ve passed a resolution to compensate themselves in full, however they have not yet gone through a budget amendment process to do that. So they’re still in the middle of giving us direction on what to do, and then actually engaging it to make it happen. And that engagement to make it happen, that actual discussion won’t be had until all the amendments are contemplated for the 2019 operating budget.”

According to the numbers obtained by the Times, if the salary change approved by council is implemented, this will amount to a total annual increase for taxpayers of $21,820.56, or more than two-thirds of the annual cost of an individual councillor’s salary. The total monthly increase will be $1,818.38.

“It’s like anything else. Any time you talk the word ‘increase,’ nobody likes to hear that, but it’s back to that lateral equivalent as I see it and understand it,” said Prokop.

For the mayor’s position, this would represent a 13.5 per cent increase ($472.50 monthly) for an annual salary of $47,670. The deputy mayor position, which is rotated equally between councillors throughout a four-year term, will see an 11.1 per cent increase ($235.88 monthly) for an annual salary of $28,330.56. Councillors will see an identical 11.1 per cent increase ($222 monthly) for an annual salary of $26,664.

If the changes are implemented, councillors would be topped up retroactively to Jan. 1, 2019.

While Armfelt implied council’s decision may have subsequent budget implications in future, Prokop contends that council’s compensation adjustment will not affect property taxes.

“That’s something that our finance guy, Mr. Orwa, has to put together on how to do that. That’s not completely final, I guess. Whatever that figure was, it wasn’t affecting any tax increase — bottom line — related to that.”

Debated in open session at the Municipal District of Taber’s Dec. 11 regular meeting, that council passed a 4-3 resolution to take no action with regard to the compensation afforded its elected officials. Prokop argued the town’s salary implications had a legal factor which had obligated town council to discuss the matter behind closed doors.

“I believe because of the policy related to that, and the legal side of that. Administration and council recommended to go that route. I have no idea what others did. That’s always a difficult thing when you’re discussing any wage level in the political circle.”

In March 2017, previous council approved a salary increase for the mayor’s position and councillors. Starting with the present 2017-2021 council mandate, the mayor’s compensation saw a 39 per cent increase to $42,817, while councillors received a 32 per cent raise to bring the councillor average to $24,765.

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