By rdnewsNOW staff

Rocky Mountain House considering boost to mayor and council remuneration rates

Nov 26, 2018 | 10:03 AM

Council for the Town of Rocky Mountain House will be considering proposed changes to their remuneration rates next month.

On Nov. 20, council was presented with a report from CAO Dean Krause that proposes an increase in those rates in light of upcoming federal government changes that will remove a long-standing tax exemption for elected officials.

The upcoming changes will remove a current tax exemption of up to one-third of an elected official’s total compensation in salary plus allowances. In other words, elected officials who are currently paying income tax on only two-thirds of their total compensation (salary plus allowances) will soon lose that benefit.

Effective January 1, 2019 all compensation for mayors and councillors across Canada will be taxed as full income and be subject to deductions for Canada Pension Plan (CPP) contributions, thereby decreasing after-tax compensation for elected municipal and provincial officials.

Options for municipalities include adjusting pre-tax compensation for 2019 to maintain elected officials’ after-tax compensation at 2018 levels.

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Municipalities could also increase salaries for 2019 to ease, but not negate, the decrease in elected officials’ after-tax compensation and as an alternative to a fully-compensating increase, fewer benefits but lower financial costs.

As an alternative or supplement to increasing pre-tax salaries, municipalities can also develop more comprehensive reimbursement plans for expenses incurred. This could include both the types of expenses and the total amounts of reimbursement available.

Finally, taking no action is said to effectively decrease take-home compensation for affected officials with no immediate effect on municipal budgets. Officials say this option avoids the immediate need to find cost-savings, contemplate property tax increases, or communicate changes to the public. However, elected officials would face a loss of income which could discourage participation in municipal administration, especially among youth.

In Rocky Mountain House, the mayor is currently paid $40,539 in annual salary ($2,664.65 per month). Proposed is an to increase to $2,900 per month.

The deputy mayor currently receives $1,191.69 per month with a proposal to increase it to $1,300.

Town councillors currently earn $21,712.32 annual salary ($1,098.76 per month) with the 2018 policy proposing that bump it up to $1,200. 

Current per diem rates for out-of-town council-appointed functions: events 2 to 4 hrs $119.17, 4+ hrs: $231.80, AUMA: $306.12 per day.

Proposed per diem rates: up to 4 hrs: $155, more than 4 hrs: $240, AUMA/FCM conferences: $330 per day.

Currently there is a policy and a bylaw in Rocky Mountain House that addresses council compensation and education allowance but it is being proposed to be consolidated into one policy for clarity and ease. A separate travel and expense policy is also being drafted for the same purposes.

Town officials note the draft policy does not address an increase in Council’s honoraria or per diem for inflation or cost of living. It only increases the amounts in consideration of the new tax rules to maintain Council’s net pay.

Town officials say the financial impact to the budget is approximately $15,000 annually.

The current pay rate for council was last updated in October 2016.

Council has also inquired about health benefits in the past. This has also been included in the draft policy for council’s consideration.

It is estimated the additional annual cost of benefit structure changes would be between $66,420 to $88,120 based on current income and whether family is included in dental and health.

At this point, Rocky Mountain House council has not adopted the proposed new policy nor made any amendments.

Council will discuss the proposed salary and benefit changes December 18.

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