(1) The annual compensation of the mayor and city council members in cities under the city manager plan of government shall be payable quarterly in equal installments and shall be fixed by the city council subject to subsection (2) of this section. The salary of any appointive or elective officer shall not be increased or diminished during the term for which such officer was elected or appointed, except that when there are officers elected or appointed to the city council or a board or commission having more than one member and the terms of one or more members commence and end at different times, the compensation of all members of such city council, board, or commission may be increased or diminished at the beginning of the full term of any member thereof. No person who has resigned or vacated any office shall be eligible to be elected or appointed to such office during the time for which he or she was elected or appointed when, during the same time, the salary has been increased. For each absence from regular meetings of the city council, unless authorized by a two-thirds vote of all members of the city council, there shall be deducted a sum equal to two percent of such annual salary.

(2)(a) The salaries of the mayor and city council members of a city of the primary class shall be established by ordinance subject to the requirements in this section. Except as provided in subdivision (b) of this subsection, no such salary shall be increased by more than the average percentage change in the unadjusted Consumer Price Index for All Urban Consumers published by the Federal Bureau for Labor Statistics for the period since the last salary increase plus one percent. No such salary shall be increased more than once every two fiscal years. The ordinance may establish the salary for the mayor or the city council members or both.

(b) The city council may place the issue on the ballot of whether to increase the salary of the mayor or the city council members or both by more than the amount permitted in subdivision (a) of this subsection for approval by the registered voters of the city. The city council shall determine the percentage of increase and hold a public hearing regarding the increase. If the city council approves the percentage by a vote of at least two-thirds of the members of the city council, the city clerk shall transmit the issue to the election commissioner or county clerk for placement on the ballot at the next statewide general election subject to section 32-559.