Tolbert: Why The Salary Commission Proposal Makes Sense

On Friday, the Independent Citizens Commission gave us a look at their salary proposal for the officials under their review. While their process over the last couple months has been a bit messy, I think they got the final review right for the most part, particularly their proposal on state legislative salaries.

The two pieces of their proposal should be viewed together. Supported by a letter from House Speaker Jeremy Gillam and Senate President Jonathan Dismang, the commission is recommending that state legislators’ salaries be increased by $23,531 from $15,869 to $39,400. At the same time, the commission is recommending an end to the practice of reimbursing legislators up to $14,400 for office expenses.

Here is why this makes sense. The practice of office expenses has long been systematically abused by legislators. An examination I did last fall of a cross-section of House members showed that while the practice has improved following a lawsuit a couple years ago, it still has holes the size of a truck.  Honestly, it might be impossible to end this leaky bucket. Even new policy and an annual review by a CPA firm was only able to plug a few of the leaks.

That is why ending the office reimbursements and instead including this in the salary of legislators makes sense. By including this money in the salary, it is clear that this is income for the legislators and it is therefore taxable to them. They will get a W-2 with this total amount on it next year. This passes the burden to them to deduct as a business expense actual expenses incurred with doing their jobs. And if they take these expenses as an itemized deduction, they will be subject to an audit examination on these expenses just like the rest of us.

If you back out this essentially tax-free stipend, the legislators were in practice receiving of $14,400, then the pay goes to down to $25,000 – a nominal raise from $15,869.  In short, only a small handful of legislators were not taking advantage of these $14,400 in office expenses, so the raise will not have a huge increase in the bottom line the state is paying. In addition, the state will no longer have to pay staff to handle the paperwork or a CPA firm to review these expenses each year.

The proposal is one that benefits both the state legislators and the taxpayers. Nice job, Commissioners!