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Lawrie McFarlane: Saanich council pay hikes are a study in waste and excess

Saanich council has voted itself a whopping salary increase. On average, the lift totals 11.47 per cent. Some do better. The mayor, Fred Haynes, will see his remuneration jump by 13.2 per cent, to $116,450 from $102,877.
Photo - Saanich Municipal Hall
Saanich Municipal Hall

Saanich council has voted itself a whopping salary increase. On average, the lift totals 11.47 per cent.

Some do better. The mayor, Fred Haynes, will see his remuneration jump by 13.2 per cent, to $116,450 from $102,877. The other eight councillors will take home $46,050, up from their previous salary of $41,310.

Struggling to explain, Coun. Judy Brownoff gave two excuses. First, she implied, council’s hands were tied. They have a remuneration policy, you see, and were compelled to follow it.

But who approved the policy that tied council’s hands? It didn’t fall as a gift from heaven. Council approved it, and council could, with the stroke of a pen, change it.

Then again, I suspect taxpayers would be surprised to learn that the mayor of a relatively small jurisdiction is making 116 grand. That’s twice the average income in the district.

Of course, council has an answer. They tie their salaries to those of comparable municipalities. So that means if other councils behave like pigs at the trough, it’s OK for Saanich to play along? Asked and answered.

Brownoff’s second excuse was that the salary increases were justified by a change in federal tax law. Let’s dig into this.

What happened is that before this year, the Canada Revenue Agency didn’t bother asking councillors to itemize or justify their work-related expenses. They were simply granted a blanket exemption worth a third of their salary, whether they had such expenses or not.

Who came up with this idea, I have no clue. The CRA certainly doesn’t extend that courtesy to you or me. If we want to claim expenses on our income-tax form, we have to itemize everything.

But starting Jan. 1 this year, the blanket exemption was removed. Saanich responded by paying each councillor the full monetary value of that loss. I believe this is the general approach being adopted by municipalities across the province.

Let’s create a hypothetical scenario. Suppose we have a mayor earning $100,000. Before the CRA changed its policy, his/her exemption amounted to $33,000, meaning no income tax was paid on that sum. This results in a saving of about $13,500.

Once the exemption was removed, councils such as Saanich turned around and granted themselves a salary increase to make up the lost benefit in full.

This is completely scandalous. First, would a mayor making $100,000 really have expenses of $33,000? No one knows for sure, but while it’s possible, it is also highly unlikely.

Keep in mind, most work-related costs, such as travelling to conferences and associated hotel bills, are already paid for by the municipality. So are office expenses such as computers, internet charges and the like.

But a second problem arises. After they’ve been paid in full for what might have been imaginary expenses, they are now allowed to claim actual expenses on top. These are permitted, for example, if the councillor is operating a business from home.

Isn’t this double dipping? Let’s return to the hypothetical scenario. Mayor X has been reimbursed in full because he can no longer claim a third of his income as expenses.

Suppose he actually did have expenses, amounting, say, to 20 per cent of his salary. He can now claim that deduction, in addition to the payout he has already received. This is the very definition of double-dipping.

In effect, it is mathematically impossible for any council member to lose out on this deal. If their expenses are less than a third of their salary, they’ve been given a pay hike that overcompensates.

If their expenses are more than a third, they can claim those and still keep the payout.

I don’t think it’s an accident this scam was introduced after last October’s municipal elections were safely over. Council knew the tax change was coming long before that date.

This is wasteful and ridiculous excess.