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Newmarket Councillors vote to continue Tax-Free Status

Read this first: We need good elected officials to take important decisions on our behalf. I don't expect them to wear hair shirts. They should be properly and fairly rewarded for the critically important job they do. But the present system is opaque and makes meaningful comparisons of remuneration way too difficult. Now read on...

Newmarket councillors yesterday voted to stick with the current practice of getting one third of their remuneration tax-free.

If they get rid of it without a compensating salary increase they will, according to Regional Councillor John Taylor, be facing a 10%-15% cut in their take home pay.  

But if they increase their pay to compensate for its loss they will be crucified on the altar of public opinion as the additional cost would be picked up by Newmarket taxpayers.

Taylor, at his inventive best, sees tax-free status as some kind of Provincial grant to the Town. 

Province to blame

Personally, I blame the Province for this lamentable state of affairs.

In 1996 the Province legislated to abolish the tax-free portion of MPPs' salaries yet, 21 years later, councillors are still saddled with this ridiculous and archaic system.

During the debates on the Municipal Act back in 2001, Michael Prue, then MPP for the Beaches riding in Toronto, observed:

"The entire problem with this bill is that they (municipal politicians) have to register that they want to keep the one third tax-free, of course with the publicity that then ensues. The alternative is that they can raise their pay, the same way this provincial Legislature did, in order to cover for that, and then have the newspapers write that they've all given themselves a huge increase, which isn't true as well. Instead of just legislating it, you've made it almost impossible for municipal politicians across those 460 municipalities."

Despite the opprobrium, a number of municipalities have grasped the nettle. To take a few examples, elected officials' remuneration is 100% taxable in Toronto, Vaughan, Peel, York, Halton, Burlington, Mississauga, Hamilton and even in Markham - home to the highest paid Mayor in Ontario, Frank Scarpitti.

Or is he the highest paid?

Tax-free status distorts comparisons

The one third tax-free status distorts comparisons between municipalities. It is not easy or straightforward to compare the remuneration of the Frank Scarpittis of this world with the Tony Van Trappists.

Until a few years ago when I brought the matter to the attention of the Town's Chief Administrative Officer, Bob Shelton, Van Trappist did not declare his remuneration from Newmarket Hydro as he was obliged to do under the Municipal Act.

The Sunshine List simply adds to the general confusion. It mixes together those who have tax-free status and the overwhelming majority who don't. (And the salary disclosure level has never been uprated for inflation, ensnaring more people every year.)

The Town uses comparator municipalities to help set appropriate levels of remuneration. But I don't know how many of these have abandoned tax-free status, if any, and how this feeds through into the calculations..

In any event it seems to me the remuneration of elected officials is a hall of mirrors where, ideally, everything should be in sharp focus.

The Province should do the right thing and legislate to get rid of tax-free status for municipal politicians.

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How the debate went at Mulock Drive on 20 March 2017

John Taylor: "I'll move option 1."  (To retain tax-free status) 

Dave Kerwin: "I'll second that Mr Mayor."

Mayor: "Any discussions? You wish to speak to it Regional Councillor?"

John Taylor: "Yes. I'll make some brief comments. As many may know but not necessarily all know, this is a requirement that Council reaffirms or rescinds the one third tax free portion of Council pay and they have to do this once per term of office and so we have not dealt with it yet this term so we are doing so now.

It is my feeling that there are fewer and fewer municipalities to be frank that have the one third tax free. I'll be honest, I don't fully understand it. I think it is because people don't like the optic that you are getting something for free.

When you move past that issue it becomes very clear that by embracing the one third tax free we are saving the taxpayers of Newmarket dollars that would otherwise be borne by the Provincial taxpayers which is a much larger pool of taxpayers. So obviously when you spread the money across so many people so, in essence, one third of the pay of each member of Council - the municipal, the Town of Newmarket portion only - is tax free so that is a cost to the Province.

So essentially I can't help but think that we are out looking for and trying to achieve grants from the Province to support us in some of our infrastructure projects or other projects it would be ironic if, on the other hand, we turned down this opportunity that is essentially a form of a grant from the Province to impact us and our budgetting process in a positive manner.

I would say this that if... I also think that... A couple of other things I would raise is that... It is hard to know exactly but if Council's decision as per I believe most municipalities that have dealt with this issue and have removed the one third tax free they typically increase the council members' pay to leave the members (pay) whole. That would probably be approaching about $100,000 impact on our budget in the upcoming year yet as we know in the past year we struggled over a $25,000 figure over whether we could sustain the planting programme at some of our facilities at some of the entrances to our communities.

So $100,000 on a large budget doesn't sound like much but when you are done with your base budget and growth and managing those impacts you are left with actually very little to play with when it comes to enhancements. So this is not a small number in terms of how it impacts the Town budget. Number one.

And number two, I think if you were to not increase councils' pay while eliminating the one third tax free, I think that should be considered by a new term of council. I think essentially... I know there is not a lot of sympathy out there for elected officials and pay but the bottom line is you are talking about something in the range of a 10% - 15% cut in pay. And I am sure there are not a lot of people in our society working anywhere would want to incur that in their own world when they've got to manage family costs and children and sports and mortgages and we all have our own considerations. 

I think it would be right for a new term of Council to consider that as we are so close to the end of this term of council so I would add a recommendation to the option 1 that, again this has to be dealt with every term, this issue of one third tax free be brought forward in the first twelve months of  the next term of council for consideration by that new council so that it can be dealt with early and that it would impact the majority of the term of council one way or another. And I think it gives people time to think about it.

It gives everybody a heads up that that could be an impact in terms of their own budgetting if we were to go that way and it allows some discussions during the election cycle and see what kind of feedback we get. But I have to be honest I get very little feedback about this. I don't think this is a priority or even makes a priority list by any members of our community and it is largely just a routine, administrative function and, again, for now, it is essentially a Provincial grant to the municipality and I think we are wise to take that grant." 

Mayor: "Councillor Kerwin is the seconder. Do you see that as a friendly amendment?

Dave Kerwin: "Yes"

Mayor: "Do you want to speak to that?"

Dave Kerwin: Our Regional Councillor and Deputy Mayor has covered it adequately, Mr Mayor. No further comment.

Mayor: "OK. Thank you. Councillor Twinney." 

Jane Twinney: "Would it be possible... I mean I will support the fact that it is coming back at the beginning of the first term of the next council. Everyone should be aware that it needs to come up and (be) discussed. I'd like to get a little bit more information then perhaps we could get staff to get some information - just high level - of the number of municipalities that are now still at that one third tax-free and the ones that have converted over to having the non one third tax-free portion say in the last one or two terms.

"How many of them have gone and had to increase their salaries so that the end result net is the same for the individual councillors? Or if they have gone and just changed it over to the regular amount without having a net amount decrease in their net salary. Just a little bit of comparison about what is going on out there in the other municipalities and some information because it would be good information to have."

Mayor: "As we go forward? I don't know if that information is currently available Mr Shelton or..."

Bob Shelton: Mr Mayor, we could take that as a staff direction to do as part of the overall review that we do every three years so that could be information that's available that could come forward in the first year of the next term unless the councillor is looking for that sooner.

Jane Twinney: "Is it possible we could get that information before?"

Bob Shelton: "It is possible probably more towards the end of the year...

Jane Twinney: "OK"

Bob Shelton: "...when we have the review in place."

Mayor: "OK. Regional Councillor"

John Taylor: "Yeah. I just wanted to support what Councillor Twinney is saying. I think... I know there is a lot going on. I don't think there is a huge rush but before the end of the term so that we have all the information so that when you go through an election process and this can be discussed and debated that it is done with all the information available. I think if we waited til afterwards there would be some missing parts of the conversation that could occur.

Mayor to Jane Twinney: "And you are satisfied with that as a direction to staff?

Jane Twinney: "Yes."

Mayor: "Any further discussion? All those in favour then."

carried nem con.


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