Council yet to decide on tax change impact on honorariums

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by Colin Smith

Some $30,000 has been set aside in the proposed 2019 budget to shelter Morinville councillors from the effects of a tax change that would result in lower take-home pay.
However, Council has yet to decide whether to boost incomes to offset the tax change which comes into effect January 1.

Up to this point, one-third of the pay that the mayor and councillors receive in the form of honorariums has been exempt from taxation, having been considered an allowance in lieu incidental expenses.

But those non-accountable allowances must now be included as taxable income, as a result of changes coming out of the 2017 federal budget. The result is a drop in net income.

At its November 13 meeting Council considered whether a review of its compensation policy, scheduled for next fall, should be undertaken in conjunction with the biennial review of administration pay being done earlier in the year.

Another issue to be looked at would be an extension of per diem compensation for attending events that are currently not covered.

Deputy Mayor Rebecca Balanko emphasized that putting up compensation levels to cover the tax rise will not result in councillors pocketing more money.

“This is a lateral move,” Balanko said. “We’re not giving ourselves a raise.”

“To go into 2019 and put in more hours and have more responsibilities and take home less money is a hard cup to swallow,” said Councillor Nicole Boutestein.

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Councillor Sarah Hall said changes needed to be made to Council’s compensation sooner than the fall.

“But I don’t believe we should make a change before we get an outside opinion,” she added.

“I don’t think anyone out there would accept a reduction in pay for the same amount of work,” said Mayor Barry Turner.

Still, while there is no net gain to councillors in increasing compensation levels to cover taxes, it does result in an increased cost to Morinville taxpayers, he pointed out.

The mayor said it is “extremely important” that council remuneration continues to be reviewed by a third party to ensure fairness.

The question was referred for further discussion to the regular council meeting on November 27.

Morinville councillors currently receive annual honorariums of $21,000, and the mayor $42,000, with one-third of the money being tax-free. Council honorariums increase each January in line with a cost of living allowance (COLA).

A survey done by the Administration in August found that of 14 municipalities in the region, four had decided to raise councillors’ pay to make up for the tax changes, four were not making an adjustment (at least at present), and six were still considering how to deal with it.

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