Council compensation about as clear as mud

By Medicine Hat News Opinon on May 23, 2019.

For 16 straight years the City of Medicine Hat’s financial statements have won honours for clarity and readability by the Government Finance Officers Association.

Unfortunately, the committee must have skipped the section on local council compensation.

Once, again the 2018 annual financial statements of the corporation of Medicine Hat includes a confusing breakdown of how elected council members are remunerated for their service.

So obscured is it that the News was roundly criticized by council members themselves when such information was relayed almost verbatim last December as the pay formula was changed.

That vote was to keep net amounts even after new federal tax measures were set to come into effect, but you’d need a tax lawyer to explain why and how.

But the charge, levelled directly at the News during session and prior to the vote, was that our reports – based on the city’s own report – obscured the true picture.

In other words, by quoting the city’s own financial report, the News provided a disservice to Hatters.

We’ll leave that logic laying where it hit the ground. Suffice it to say that it’s perhaps understandable from a political standpoint not to discuss how much you make, or at least not have others discussing it.

What’s inexcusable is that after such controversy there’s still no clear, official picture of how council pay breaks down.

Of nine members, only Coun. Kris Samraj made a very game attempt on his website to reconcile his paycheque with how the system here and elsewhere actually works.

Over the past half-dozen years, the News has requested more information and an explanation of pay and benefits a handful of times. Each time we’ve been directed to a page of figures and boilerplate explanation in the annual report.

In the most recent, council compensation is broken down in two columns – “base salary” and “benefits and allowances” – then totalled.

Councillors, for example, had a base pay in 2018 of about $23,000 and often benefits approaching the same amount.

Nowhere on the page is mentioned the fact that one-third of salary was earned tax free (a practise done away with by Ottawa in 2019, a move that’s at the heart of this issue).

So, in fact, about $12,000 in “benefits and allowances” relates to that tax-free amount that council members consider salary and the rest to traditional benefits like a dental plan.

It is assumed that the breakdown is similar for the mayor’s lopsided looking pay stub, which is officially $69,000 in base pay and $50,000 in benefits. Of course, more than half the latter figure is salary that’s not really salary for tax purposes, but you’d have to know that already.

As a disclaimer, such practice is in line with the previous federal tax rules before 2019, but its unclear and, after years of silence on the issue, frankly misleading.

Going off those bare numbers, is it any wonder residents might make an assumption about cushiness of an office-holder’s benefit package?

Might this support the widely held but incorrect belief that local councillors have a gold-plated pension awaiting them?

For the record, Medicine Hat elected officials haven’t had the opportunity to take part in a pension plan since at least 1980, but instead a mid-range matching contribution to a direct contribution plan.

The entire issue will arise again by late 2020 when an overall of the formula is discussed about one year prior to the next municipal election.

And, for the record, Medicine Hat’s financial reports are accessible, and deserve some recognition.

They are well done, and anyone who gives them a serious read will be able to generally figure out what is going on.

Unfortunately there’s also a lot left unsaid.