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Staff Report
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Report To: Joint Committees
Date of Meeting: June 19, 2023
Submitted By: Mary -Anne Dempster, CAO
File Number:
Report Number: CAO-012-23
By-law Number:
Resolution#: JC-085-23, C-105-23
Report Subject: Council Remuneration — Impact of Elimination of 1/3 Tax Free Allowance
Recommendations:
1. That Report CAO-012-23 be received;
2. That the 1/3 tax exemption equivalent be applied to 2023 Council salary rates; and
3. That any budget variance incurred be covered through overall Municipal wage gapping.
Municipality of Clarington
Report CAO-012-23
Report Overview
Page 2
Being a Member of Council requires the dedication of significant time and effort, the
demands of which are increasing as Clarington continues to grow rapidly. There is a need to
ensure that elected officials are fairly compensated for their work.
Individual municipalities can decide how they will structure their remuneration packages,
within the guidelines as set under the Municipal Act, 2001. Clarington has not undergone a
comprehensive review of Council remuneration in several years and such a review should
be undertaken to ensure compensation is fair an appropriate.
As an interim measure to ensure that efforts are made to ensure compensation rates are
appropriate, this report recommends that Council reconsider its decision to not adjust pre-tax
income due to the removal of the 1/3 tax exemption by the Federal government in 2019. The
net impact of this has created a significant gap amongst comparator Lakeshore
municipalities in Durham Region who did institute an adjustment. This gap was further
widened by the Council imposed remuneration freezes in 2021 and 2022.
1. Background
Compensation Governance
1.1 Under the Municipal Act, 2001 a municipality may pay any part of the remuneration and
expenses of the members of any local board of the municipality and of the officers and
employees of the local board.
1.2 A municipality may only pay the expenses of the members of its council or of a local
board of the municipality and of the officers and employees of the municipality or local
board if the expenses are of those persons in their capacity as members, officers or
employees and if, a) the expenses are actually incurred; or b) the expenses are, in lieu
of the expenses actually incurred, a reasonable estimate, in the opinion of the council or
local board, of the actual expenses that would be incurred.
Clarington Council Compensation Policy
1.3 By-law 2011-005 outlines the compensation policies applicable to the Mayor and
Members of Council. A review was undertaken most recently in 2018, specific to the
elimination of the 1/3 tax exemption and OMERS related benefits. A fulsome review of
the entire remuneration package has not been taken to Council for several years.
Municipality of Clarington Page 3
Report CAO-012-23
2. Preliminary Review
2.1 Staff compiled salary information from other lower -tier Durham lakeshore municipalities
(inclusive of Clarington). Other benefits such as health, severance, car allowance and
retirement are not included for the purposes of this exercise. Notable highlights are
included below:
Ajax
Clarington
Oshawa
Pickering
Whitby
Population
126,666
101,427
175,383
99,186
138,501
(2021 Stats
Canada)
Council
1 — Mayor
1 — Mayor
1 — Mayor
1 — Mayor
1 — Mayor
Composition
3 — Regional
2 — Regional
5 — Regional
3 — Regional
4 — Regional
3 — Local
4 — Local
5 — Local
3 — Local
4 — Local
Annual
$116,204
$97,359
$132,280
$120,703
$124,251
Salary —
(Jan 1, 2022)
(Jan 1, 2023)
(Nov 15, 2022)
(Jan 1, 2023)
(Jan 1, 2020)
Mayor
Annual
$44,468
$38,944
$48,544
$50,293
$44,004
Salary -
(Jan 1, 2022)
(Jan 1, 2023)
(Nov 15, 2022)
(Jan 1, 2023)
(Jan 1, 2020)
Councillor
Salary
Yes
No
Yes
Yes
Yes
topped up
due to
elimination
of 1 /3 tax
free
2.2 The chart above showcases that Clarington ranks lowest in the listed salary categories.
The salary gap was caused in part due to the removal of a long-standing federal tax
Municipality of Clarington
Report CAO-012-23
Page 4
exemption for elected municipal office holders, that expired on January 1, 2019. It was
up to each individual municipality to decide how they would address this change in
federal tax law, and its reduction of after-tax compensation for elected officials.
2.3 The Federation of Canadian Municipalities (FCM) published a report in 2018 with
options for consideration:
1. Compensating salary increase (full)
2. Compensating salary increase (partial)
3. Expanded expense policies
4. No action
2.4 Clarington was the only municipality in the comparator list to not off -set the elimination
of the one-third tax free salary with any corresponding adjustment. COD-029-01
informed Council of the options, including the status of decision of the other comparator
Municipalities listed, only one of whom had decided at that time. This decision of
Clarington Council significantly contributed to the salary gap that is evidenced above.
3. Financial Considerations
3.1 The financial impact to implement the value of the former 1/3 tax exemption would be
$129,136 based on 2023 salaries.
4. Concurrence
This report has been reviewed by the Deputy CAO/Treasurer who concurs with the
recommendation.
5. Conclusion
It is respectfully recommended that the Council compensation be adjusted to account
for the former 1/3 tax free exemption (net of any statutory reductions) and applied
against the current 2023 salary rates.
Staff Contact: Justin MacLean, Manager — Strategic Initiatives, 905-623-3379 Ext. 2017 or
Jmaclean@clarington.net.