The escalatory systems behind the paycheques of BC mayors and councils

This is the third story in a four-part series on the pay of Fraser Valley politicians. Part 1: See every mayor and councillor’s pay | Part 2: The case for higher politician pay | Part 3: The leapfrog effect: how cities set their leaders’ wages | Part 4: See the expense tallies of every Fraser Valley mayor and councillor

Call it the leap-frog effect.

If you want to know why the pay for local politicians in many BC communities has risen faster than residents’ wages over the past decade, you need to understand how most municipalities decide upon a fair wage for a mayor or councillor.

Politician salaries are still relatively modest compared to executive positions in both the private sector and in local government. In Chilliwack, for instance, the mayor made about $135,000 last year, while the top bureaucrat, the chief administrative officer, took home more than $200,000.

But politician salaries have been catching up.

The Langley City mayor’s sash comes with a salary that is $50,000 higher than a decade ago. In Langley Township, the mayor makes $60,000 more than he did in 2012. And Abbotsford, Chilliwack, and Mission all pay their politicians considerably more than a decade ago.

The increases haven’t come out of thin air. Instead, most BC cities have adopted an escalatory system where their politicians’ wages are linked to those at other cities and towns. So when one city gives its leaders a raise, those pay hikes become data that is used to justify increases in other communities. Those higher salaries in turn signal to even more communities that it’s time to raise the pay of their own mayors and councillors.

How it works, usually

For decades, when it came time to set their own pay, BC’s mayor and councillors defaulted to one simple gameplan: they look at what other municipalities pay their politicians.

There are a few variations, but typically either staff, consultants, or a specially appointed task force create a list of similar municipalities, look at what politicians in those communities are paid, and then recommend salaries for their own council and mayor that is an average of those comparator cities. Sometimes, the salaries of provincial MLAs, local government staff, and other political actors are also included in the comparison. Frequently, the pay reviews are held at the end of a council term, so that council members vote on the next council’s pay, rather than their own. (The idea is that reduces the conflict of interest inherent in the process, even though most councillors tend to seek and win re-election.) In the years prior to the review, pay is often simply linked to the inflation rate. 

The approach is meant to be a logical and, crucially, politically defensible way to ensure that politicians are paid a normal sum for the jobs they are chosen to do. 

"If we want the best individuals in these chairs in the future beyond the time we are in here, it's something that we need to do so at least we are at par with regards to the communities throughout the province," Kelowna Mayor Tom Dyas recently told the CBC.

But the argument comes with significant flaws. For one, while municipalities do compete against one another for the talent of top bureaucrats and staff, the same is not true for their leaders. The mayor of Kelowna is not going to leave his position to become mayor of Vernon or Penticton. 

There are real competitive forces at work. In the second story in this series, Langley City Mayor Nathan Pachal noted that communities are competing against private sector wages that leaders may be foregoing to serve their cities and towns. But that’s an argument for setting pay based on private sector wages, not those for other politicians.

As it is, for the last decade, the pay reviews have resulted in the salaries of local politicians exceeding the rate of inflation across many communities. (Politicians have argued that their jobs are also growing much more complicated as a result of increased obligations and social media demands.)

Historic cross-community data is haphazard, but a sampling of community pay shows mayoral and council salaries often rising twice as fast as those of constituents. In Chilliwack, the mayoral salary has risen by 55% and council salaries have increased by 70% since 2013. Over that time, prices (i.e. inflation) have risen by 31%. Similar rises can be found across the province—a fact that is to be expected when wages of most municipal councillors are linked to those in other communities.

Some of the increases followed a move by the federal government in 2019 that eliminated a federal tax exemption for one-third of mayor and council salaries. Cities and towns ended up raising salaries to attempt to match the expired tax savings.

But the scale of wage increases before, and after, that tax-related bump suggests that the comparative analyses used by the municipalities have a strong bias in favour of significant pay hikes. 

The analyses can also be vulnerable to manipulation and cherry-picking by those who create them. And when dozens of municipalities are all basing their politicians’ pay on one another, it only takes a couple bad apples to spoil the whole bunch. If staff at just one or two municipalities put their thumbs on the wage scale and deliberately pick high-wage comparators, the resulting pay hikes can become data that lead other cities and towns all across BC to follow suit. It’s the butterfly effect, except for the paycheques of local councillors.

The systems also obscure the fact that in the end, as Pachal noted, the wages of politicians depend not on math but on the whims of those same politicians—and, frequently, whether they think they can justify them to their constituents.

Mission’s salary skeptics

A decade-old discussion in Mission illustrates how analyses can favour larger increases—and how it’s often up to politicians to put the brakes on their own suggested pay bumps.. 

Thirteen years ago, Mission’s city staff produced a report that suggested the municipality’s mayor and councillors were dramatically underpaid. The report collected the wages of politicians at 12 other municipalities, and calculated that the mayors made an average of $80,500—more than $20,000 more than Mission’s mayor at the time. Mission’s councillors were also seemingly heavily underpaid.

Mission’s politicians, however, were worried about the optics of hiking their pay by such a sizable amount right before an election. So they did a rare thing: they questioned the report’s methods. Three years earlier, it was noted, staff had used a different set of municipalities to evaluate politician pay. So Mission council asked staff to return with an analysis that used the same set of municipalities as in 2007.

Two weeks later, staff came back with a report that, instead of showing local politicians were underpaid, suggested that the wages of Mission’s mayor and council were average. So Mission’s politicians decided to refrain from hiking their salaries.

The moment showed how the results of any comparative study are highly dependent on which municipalities are—and aren’t—included in the analysis. Two different reports by Mission staff came to starkly different conclusions about whether Mission politicians were underpaid or not. The inclusion of high-paying comparisons and the exclusions of low-paying municipalities can skew the results towards a large pay hike. And it’s almost impossible to detect if comparators are intentionally skewed to favour higher pay increases.

The reverse could hypothetically occur. But there’s no record of city staffers compiling a list of comparable municipalities, finding their local council is actually overpaid, and recommending a pay cut. 

When push back comes against significant wage hikes, it tends to come from politicians themselves worried about the optics of a report’s findings.

In 2014, Mission’s council, and then its staff, got a second kick at the can. This time, staff created a list of five comparable municipalities. Staff chose three municipalities with slightly fewer people than Mission and two with slightly more, and proceeded to measure the average—and median—pay of those municipalities.

The five communities selected were Campbell River, West Vancouver, Vernon, Port Moody, and Penticton. Creating such a group of comparables, also involves discarding potential communities. And so, in 2014, one obvious potential community with a similar population to Mission’s was left aside: West Kelowna.  

(In response to an inquiry from The Current, a Mission staff member said that when the list was created in 2014, West Kelowna because the municipality was only seven years old and for geographical balance—the list already included two Interior communities. )

Over the next eight years, that simple decision to exclude West Kelowna, where politicians made less than those in the Fraser Valley, impacted what is considered fair pay for Mission politicians.

It led to a modest pay bump in 2014. Four years later, in 2018, staff used the same policy and the same comparator municipalities to conclude that the city’s mayor deserved to be paid a little more than $84,000—nearly $20,000 more than the mayor had made just a half-dozen years earlier. Councillors also received a substantial wage increase. (The salaries of Mission’s councillors are pegged at 50% of the mayor’s pay.)

In 2022, Mission council’s pay was due for yet another review. Again, the same policy—and the same comparable municipalities were used (after the 2011 incident where comparables were changed from the previous review, staff have stuck with the same group of other cities). And again, the comparison led staff to recommend a $14,000 hike to the mayor’s salary and a $6,000 bump for councillors.

The analysis underscored how the highly discretionary decision of defining “comparable communities” has an immense impact on what municipal leaders could get paid. 

Mission’s population—and the size of its budget—is closer to that of West Kelowna than Port Moody. But West Kelowna’s politicians are paid far less. If Mission’s list of comparable communities included the Okanagan city instead of the Lower Mainland municipality, the resulting analysis would have suggested a much smaller salary for its politicians. 

In the end, 2022 saw Mission’s politicians again put the brakes on staff’s suggested salary. Mayor Paul Horn said the bump suggested by staff was too much; Coun. Jag Gill said that while a pay increase might be deserved, none should be instituted given the struggles of local residents and business owners.

Council ended up approving a smaller increase—rather than the mean salary of the five comparable municipalities, the mayor would receive the median. (The median is the middle figure of a set, the mean is the average: in this case you get it by adding the salaries of five mayors together and dividing by five.)

Horn’s salary was set identical to the $96,491 made by his counterpart in Vernon—the median municipality among the five comparable communities. It will be revised upwards, by the rate of inflation, over the following four years, until Mission takes another look towards its comparable communities in 2026.

The odds are, though, that when they do, they’ll find politician salaries in those other cities have continued to increase faster than inflation.

In August of 2022, just a month after Mission’s politician salaries were aligned with that of Vernon, that Okanagan municipality undertook its own remuneration review. A three-person committee there looked at 10 other municipalities—including Mission. Vernon’s policy links its politicians’ pay directly to the city’s own rate of growth, so with Vernon’s population having grown by 10% since the last pay bump, the committee deemed that the mayor’s salary should do the same. 

(Were Mission to have reviewed its council pay a month later, its committee would have deemed its politicians to deserve a higher wage than suggested in July.)

The situation highlights the absurdity of how political salaries are set in BC. The formula for determining the appropriate pay for politicians in Mission is influenced by how many people are moving to a city four hours away in the Okanagan. But not only Mission and other communities that compare their salaries to Vernon’s is affected. Any municipality that uses Mission as a comparator ends up also being impacted by Vernon’s growing population. And so on down the line. 

The Abbotsford model

But there’s another way.

In 2022, as Mission considered its staff recommendations to hike the salaries of mayors and councillors, Coun. Jag Gill cast the lone vote against any hike whatsoever. 

“I think anyone who does this role full-time, whether mayor or council, is definitely underpaid—especially when it comes probably to the mayor,” Gill said. “I know you do this role almost 24/7.” 

And yet, while he acknowledged the mayor is paid less than those in other high-pressure jobs, Gill suggested he and the city's councillors should keep their current salaries, saying that if other companies and individuals had to tighten their belts, local politicians should do the same. 

The idea that council’s pay should reflect those of their citizens isn’t just an ideal. In Abbotsford, it’s at the core of how politicians there are now compensated.

Seven years ago, Abbotsford convened its own task force to review its politicians’ pay. And although that group, led by local lawyer Douglas Macadams, considered the pay handed to other politicians, it eventually landed on a relatively novel approach to set the wages of council: linking compensation not to politicians in other communities but to residents in the council’s own city.

The idea, Macadams said at the time, was that politicians should prosper only if the residents they led prospered.

The approach is conceptually similar to pegging salaries directly to measures of inflation. But rather than simply linking it to the Consumer Price Index, it ties it to wages in a way that is symbolically meaningful. 

The method allows for political pay to outpace inflation if average pay hikes in Abbotsford exceed the inflation rate. It also allows for pay to grow slower than inflation, if that is the case.

It’s an open question whether local politicians can foster conditions to improve salaries, or whether improved salaries are even necessarily a sign of progress. In general salaries tend to reflect regional and national economics. Local politicians might be able to promote the development of local industries that provide many very well-paying jobs. At the same time, average salaries can reflect trends related to housing, rather than the local economy. It’s possible for a city to end up with a very high average income not because of a booming local economy, but because only wealthy people can afford to live in the community. 

So whether the method can actually accomplish its goal of rewarding politicians that help their citizens prosper is an open question.

But one thing is clear: by roughly tying wages to a component of inflation—and, crucially, by not deviating from that method every four years—Abbotsford’s formula simply and efficiently removes the escalatory impacts that accompany the use of comparable municipalities. It also avoids the circular logic that arises when municipalities set salaries based on each others’ wages.

Any Abbotsford council can deviate from the current system, but will potentially open themselves up to criticism when they do so.

Thus far, though, few municipalities have adopted Abbotsford’s method. 

The Current has only found one other government body that has followed Abbotsford’s lead: the Fraser Valley Regional District, which recently adopted a similar policy that pegged the salaries of its directors to the wage of residents. (Directors are entitled to 21.2% of the average FVRD residents’ salary, with add-ons for electoral area directors, committee and board chairs, and vice chairs.)

But across BC, most other municipal governments rely on various comparison schemes to set their politicians’ pay.

So as long as the wages of BC’s mayors are bound to one another, and so long as no staffer wants to suggest their politicians deserve a below-average salary, it will be left to mayors and councillors to decide when the money they make is enough.

This story has been edited to include a mention of the pay increases councils were given to compensate for the end of a federal tax exemption.

This is the third story in a four-part series on the pay of Fraser Valley politicians. Part 1: See every mayor and councillor’s pay | Part 2: The case for higher politician pay | Part 3: The leapfrog effect: how cities set their leaders’ wages | Part 4: See the expense tallies of every Fraser Valley mayor and councillor