Council salaries to increase significantly in 2019

The cancellation of a federal tax break for council salaries is hitting the city of Richmond.

Richmond Mayor Malcolm Brodie’s salary will go up between $35,000 and $39,000 in 2019 to compensate for losing a federal tax exemption for one-third of his salary.

A motion by Coun. Kelly Greene to cancel large pay increases for mayor and council was defeated at last Wednesday’s council meeting but another motion to allow councillors to waive their increase passed.

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Staff is recommending the increase to the mayor’s salary as well as an increase between $9,000 and $12,000 for councillors after their federal tax exemption of one-third of their salary was cancelled.

Brodie called the decision by the federal government to cut the one-third tax exemption, a subsidy to municipalities, “regrettable.” He added that the previous salary levels were based on having the tax exemption, and this is a salary “adjustment,” not a “raise.”

“Is it fair that mayor and councillors should have to take a very substantial pay cut when you consider take-home pay?” he said.

But Greene thinks she and her colleagues should forgo the increase, saying council needs to show an example of financial responsibility.

“It’s going to be a really, really substantial salary increase and on top of that we’re facing a lot of cost pressures this year,” Greene said.

Greene said staff is suggesting that the large increase will ensure the mayor’s and councillors’ net pay stays the same, but, she pointed out, what taxpayers pay goes up to compensate for the loss of tax exemptions.

“I know it’s not a large budgetary item but it really speaks to… being able to understand where our constituents come from – if our constituents’ costs go up, they can’t go to their employer or they can’t go back to where they’re getting their pension from and (say) it’s not enough, I want more because my bottom line has change – they don’t have that privilege,” Greene said. 

Greene said, before she was elected, she wasn’t aware council members didn’t pay taxes on one-third of their salaries – she assumed that the salaries listed in the financial documents were taxed like everyone else’s salaries.

“I don’t think anybody knew that we had a one-third tax exemption – I’m a very informed person - I didn’t know there was a one-third tax exemption (for) municipal elected officials,” she said. 

Greene’s motion was only supported by Coun. Chak Au. A subsequent motion, though, whereby councillors can waive the salary increase and Au said this is what he plans to do.

Au disagreed with the increase even though the change came because of federal taxation change.

“I don’t think it’s the right thing to do – we can’t download our so-called loss of income to taxpayers,” he said. “I don’t think there are many people who have that privilege.”

Au thinks the federal tax exemption belongs to the past, saying it’s an “old-school way of thinking.” Elected officials shouldn’t have “special status,” he said – there are many others who serve the community, like volunteers.

“I don’t think we should have that privilege,” he said.

In 2018, the mayor received a base salary of $135,263, and councillors’ base salary was $67,612 – mayor and councillors also receive benefits and are reimbursed for expenses.

City spokesperson Ted Townsend explained that the salaries were effectively being subsidized by the federal government with the tax exemption and the city will now bear the full burden of these salaries. The city received advice based on labour law and standard compensation practises that they have an obligation to offset the loss.

Greene thinks council needs to set an example in their own finances, even if it’s a small item in the grand scheme.

“The budget impact of us getting a big salary increase is extremely minimal – our salaries are so small in the scope of how much money the city spends but we need to demonstrate we’re responsible at every line item, even the ones that personally affect us,” Greene said.

Greene said the city is facing some “cost pressures” - the city is growing and it’s starting to catch up, for example, the low number of emergency personnel.

Greene was planning to bring the motion forward at today’s council meeting, which was scheduled for the late afternoon.

Another motion by Coun. Carole Day to convene a panel of citizens to assess compensation levels also failed with Coun. Au, Day, Greene and Wolfe in support.

Brodie said the Federation of Canadian Municipalities has been actively working to reverse this federal decision, and the Union of B.C. Municipalities has also been making efforts to get it changed back.

According to Townsend, Coquitlam, Port Coquitlam, Mission, the two Langleys, Lions Bay, Maple Ridge, the district of North Vancouver, Kelowna and Port Moody have implemented similar increases, and Burnaby is planning to bring forward a recommendation in January.

 

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