Council Should Pay Back Compensation

(Note: This post has been edited to correct incomplete or misstated information. It is up to the reader to decide how these changes affect the basic premise of the post. The Friday print edition of the Newport Beach Indy will have more on this issue. -Editor)

A City Charter is like the constitution of the city.  If you don’t have a charter, then state law dictates what you can and cannot do as a city.  Newport Beach’s Charter was adopted on June 8, 1954, after a failed attempt in 1948.  The charter became effective on Jan. 6, 1955.

At the City Council meeting last month, the city appointed a Charter Update Committee, to bring back recommendations for amendments to be placed on this November’s ballot.  One of the items that needs to be “clarified” by the committee is council compensation.

The existing charter prohibits compensation.  That’s right – no salary!

I bet that is a surprise to you.  Especially since the city website prominently displays budget and salary information on the home page.  The mayor gets $20,492 in salarycash and $19,276 in benefits each year, for a total annual compensation of $39,768.  The typical councilman gets less: $14,444 in salarycash and $18,223 in benefits for a total of $32,667.   These benefits include Public Employee Retirement System (PERS) contributions.  That’s right, the city council is on the dole … I mean the employee retirement plan.

How does this happen, you ask?

Simple. The charter allows for a “stipend”an “allowance” to reimburse councilmembers for “expenses.”  This stipendallowance started at $400/month and has climbed to $1,227/month.  The benefit package is not cash compensation, but is compensation nonetheless.  In fact, the “stipend”“allowance” and the cash in-lieu for health benefits are reported on a W-2.  So, according to the IRS rules, clearly the council has been receiving “compensation” in violation of the city charter.

This is one of those “clean up” items that the charter committee is being asked to correct.  I believe the only “correction” that the committee is considering is changing the charter language from “allowance” to “salary,” “compensation,” since the city has been paying for more than two decades.

I know how much work our councilmembers do.  At $1,227/month, it probably works out to around $15/hour.  With benefits it is probably more like $35/hour.  And depending on whether the councilmember goes and does every activity, it could be more like $10/hour with benefits.

But did you know that $1,227/month is second highest in the county, behind Irvine?  (Irvine councilmembers get $880/mo. council salary and $880/mo. as Great Park board members, which are technically separate compensations. -Editor) Or that if we did not have a charter the state would only allow $600/month for a city of Newport’s size? (It would be a $600 base plus a cost-of-living inflator that would make it significantly higher. -Editor)

Now the question is, what do you do about it?  Let’s say that we give the council the benefit of the doubt, and say that they work hard and probably deserve the compensation.  It does not change the fact that every current councilmember has violated the City Charter, the city’s constitution, for their entire terms.

Shouldn’t the correction be to pay back the apparently illegal compensation, instead of trying to “fix” the constitution? It also seems that, effective immediately, the PERS contribution should be stopped, and the council should pay the city for their medical benefit package or get their own.

Then there should be a discussion on how to deal with the transgressions.

Councilman Steve Rosansky, to his credit, when he found out about the charter language more than a year ago, declined to take city health benefits.  What about the rest of the council?

Being able to determine your own future is why we have a City Charter.  This is why Costa Mesa is voting to adopt their first Charter in November of this year.  They want a voice.  Where is yours?

Questions or comments can be directed to scott.peotter@taxfighter.com.