Collingwood politicians could be getting a raise this year.
On Monday, the Strategic Initiatives Committee voted in favour of salary increases from $5,000 for the mayor to $2,700 for councillors.
A change to income tax laws led staff to recommend the raise. In the past, one-third of a municipal councillor’s salary (including mayor and deputy mayor) was exempt.
That exemption assumed that one-third of the salary would be used for expenses related to their municipal duties. However, councillors did not have to submit receipts or proof of expenses to receive this tax exemption.
That changed in 2017, with the passing of the federal budget; the law changed to make the full salary subject to income tax, eliminating non-accountable expense allowances paid to elected officials.
The 2017 federal budget called the previous exemption “an advantage other Canadians do not enjoy.”
Also included in the change, elected officials may now claim expenses such as mileage, office supplies, and other costs incurred but not reimbursed in their duties as deductions against their salaries when filing for income tax.
Collingwood Treasurer Marjory Leonard presented a report to the Strategic Initiatives Committee that outlined the impact of the change.
According to her report, the loss for the mayor amounts to $3,902 a year. For the deputy mayor it’s $2,643 per year, and for each councillor it’s $2,882 per year. However, those numbers don’t take into account any deductions claimed by councillors for expenses related to their work.
Currently, the council salaries (gross) are $37,873 for the mayor, $27,110 for the deputy mayor, and $21,750 per council member. The estimated net pay under the old rules was $31,752, $23,061, and $18,593 respectively.
“There maybe no more awkward task for council than increasing remuneration,” said Leonard. “It can be perceived as ... giving themselves a raise.”
The recommendation from Leonard was an increase to the gross salary to make up for the extra taxation and higher CPP contribution with the same net pay (not including deductions).
The increase for the mayor would be $5,627, bringing the mayor’s gross income to $43,500 per year. That would mean the mayor's net income remains at $31,734, which is $17 less than the salary under the old rules.
For the deputy mayor, the increase would be $3,790, bringing that salary up to $30,900 (gross) with a net of $23,035 (net), a reduction of $26.
For councillors, the proposed increase is $2,750, bringing the gross salary up to $24,500 with a net salary of $18,616, which is $23 more than in 2018.
There is still the potential for those net salaries to be increased if councillors claim expenses as deductions on their income tax returns.
While the decision still rests with full council at their next meeting, March 11, all but one member of council voted in favour of the salary increase at the Strategic Initiatives Committee meeting.
Coun. Bob Madigan was the lone dissenting vote.
“We're asked at the beginning of every council meeting to declare pecuniary interests ... this is the biggest pecuniary interest that I can imagine,” said Madigan. “I don’t think the council of the day should vote for their own raise.”
Madigan is a local business owner and said he doesn’t do his job on council for the money.
“In politics there are a lot of benefits that come from it that aren’t stated,” said Madigan, adding there is now an option to track and claim expenses, which wasn’t available before.
There is added cost to the municipality as well now that all of a councillor’s salary is taxable, meaning an increase in employer CPP contributions, employer health tax, and loss of HST rebates the town was previously able to claim from the tax exempt portion of each councillor’s salary.
Leonard’s report stated the costs to the town for council payroll is $268,534, which is an increase of $28,305 for 2019 to cover the councillor raise.
The increased wage would be effective for the 2019 salary if passed by council.
For Leonard's full report, click here.