Farmers Branch council considers reimbursement option to avoid tax treatment of $200 monthly stipend

Councilman Tim Roman proposed an amendment to the council travel policy on May 20 to let members treat the $200 monthly stipend as an expense reimbursement instead of W‑2 taxable income.

Why it matters: the stipend totals $2,400 per calendar year and, when paid as W‑2 income, triggers payroll withholding and a pension contribution. Roman said the reimbursement option would “maximize the funds that we will be receiving” and make use of the existing travel expense review process while avoiding W‑2 tax treatment for members who choose it.

Aaron Flores, deputy director (deputy city secretary), explained staff had drafted policy language to implement the reimbursement path after Roman raised the issue. Flores and the city attorney said the change would not require another charter amendment or a resident vote because the previously approved charter amendment granting the stipend already allows the council flexibility in how funds are disbursed.

Under the proposal, a councilmember who opts for the reimbursement approach would submit receipts to the city secretary’s office and the travel expense review committee would approve eligible expenses up to $200 per month. Flores said the process would be similar to existing travel reimbursements and likely impose no greater administrative burden than the current W‑2 payment; in some respects it could reduce payroll compliance work because the city would not issue a W‑2 for that stipend if the reimbursement route is chosen. Flores said the policy as drafted ties the $2,400 cap to the calendar year, though councilors discussed whether to use fiscal year and favored calendar year for simplicity.

Councilmembers emphasized that the option would be voluntary. The city attorney and Flores said members could elect one approach or the other for a given period (W‑2 or reimbursement), but not both simultaneously. Councilwoman Villafranca and Councilman Neal asked about recordkeeping and practical effects; Flores said receipts would be required for reimbursements and that a councilmember who wished to donate the stipend to a nonprofit could have the stipend paid as cash and then request reimbursement to maximize the amount delivered to the nonprofit.

Next steps: staff will bring the proposed travel policy amendment back to the regular council meeting for formal adoption as an amendment to the travel policy; no ordinance or charter election is required. Council directed staff to return the policy with calendar‑year language and the reimbursement option as presented.

Ending: The change is presented as an optional administrative method for distributing the $200 monthly stipend; council members can choose the W‑2 payment or the reimbursement option once the council adopts the policy amendment.