The Ouray City Council on Tuesday night rejected giving itself a pay increase that would have been accompanied by a benefits package, despite a survey showing councilors make less than many of their peers in resort towns in Colorado and elsewhere.

Under the current municipal code, the Ouray mayor is paid $6,000 a year and councilors are paid $2,400 a year, with no benefits. A proposal presented to the council would have doubled their salaries and made them eligible for health, dental and vision b...