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Staff estimates Oak Harbor mayor spent $470K in firings

The actual cost of Oak Harbor Mayor Scott Dudley’s decision to fire a series of people in administrative positions is still a matter of dispute.

Finance Director Doug Merriman gave a presentation about the costs to the city council last week, at the request of council members. He put the cost of firing the city administrator, fire chief, police chief and two city attorneys at $471,049, which included severance packages, interim employees’ salaries and recruiting efforts.

The report didn’t include the costs associated with a lawsuit from the police chief, who claimed he was fired inappropriately. It could potentially be an expensive case.

Dudley, on the other hand, said the cost was “negligible” to the beginning fund balance if savings from unfilled positions, uncollected fees and a fund reserved for severance payouts are factored in. He said the presentation added nothing new and was just meant to embarrass him.

“It gave the council members the ability to get on a soapbox and express their frustration,” he said.

Dudley came into office in January after campaigning as a reformer and vowing to fix problems he saw in city administration. He immediately fired the city administrator, the city attorney and the fire chief. He asked Police Chief Rick Wallace to retire in the summer, but later fired the chief after he decided not to retire.

Dudley hired Bill Hawkins, the former county prosecutor, as the city attorney and then promptly sacked him.

The majority of council members have been very critical of Dudley over the firings, especially the high cost to the city. Last week’s presentation was the second time that council members asked for a report on how much the terminations have cost the city.

Councilman Rick Almberg, a self-described fiscal conservative, has been particularly irked by the costs. In an interview this week, he said Dudley could have changed the administrative staff in a way that was much less expensive, less disruptive and more civil.

“The mayor could have had his cake and eaten it too,” he said.

Almberg said former City Administrator Paul Schmidt and former City Attorney Margery Hite offered to work with Dudley on a transition. The idea was that they would stay on while the mayor looked for replacements and they looked for new jobs. If it worked out, they would leave for new jobs, the city wouldn’t pay their giant severance packages and new people would be in their positions.

In addition, former Fire Chief Mark Soptich had enough time in the job to retire this fall. Almberg suggested that Dudley could have negotiated his exit in a way that cost the city much less, but Dudley simply fired him.

Dudley ended up taking a similar hard line with Chief Wallace. The chief decided he couldn’t be forced into retirement because he felt he wasn’t an at-will employee. The city council was set to adopt an amendment to the city’s employment manual, which would have clearly identified Wallace as a for-cause employee, effectively protecting him from the mayor’s ax. Dudley fired him just a few days before the council was set to vote on the measure.

Wallace filed suit, claiming wrongful termination and breach of contract. While Dudley claims the lawsuit is without merit, it could potentially cost the city a lot of money. Wallace asked for $550,000 in lost wages and benefits in his claim for damages.

Interim City Attorney Grant Weed and an attorney for the city’s insurance pool are defending the lawsuit together. The city’s insurance pool won’t cover the breach of contract allegation, which means Weed has to defend the city on that issue. Weed earns $160 an hour. In addition, the city will have to pay if Wallace prevails in the breach of contract argument.

In his presentation to the council, Merriman laid out the costs associated with the terminations of the five administrators. The largest cost, a total of $234,000, was from the legal department, which included severance packages for the two fired attorneys and $120,000 in fees to Weed’s firm for six months of work.

Merriman said the costs were offset by savings in other areas. He had set aside $244,000 in a special fund to cover the costs of severance packages, though he hadn’t anticipated that the five managers would be fired in such a short time.

The mayor kept several positions unfilled — an administrative assistant, a battalion chief in the fire department and a police lieutenant — in order to mitigate the costs of the terminations. That saved a total of $72,000.

In addition, Merriman said the mayor instructed him to include as an offset the three years of fees, a total of $140,000, collected this year from the hospital for the fire department’s emergency services. Dudley previously claimed the city overlooked the payments for three years and new fire chief, Ray Merrill, was able to collect the money this year.

If all the offsets are taken into account, the total net costs of the firings was just $16,000, not including the lawsuit expenses, he said.

Several council members, however, didn’t agree with this reasoning. Merriman, when pressed by Almberg, said the fees from the hospital had not been overlooked and that the city staff was well aware the contract with the hospital had lapsed. He said negotiations began before Dudley came into office; that the fees would be collected was never in doubt.

Indeed, Almberg argues that the real cost of Dudley’s actions is $471,000 in cold, hard cash. The issue of the offsets is meaningless, he said, just because the city had some money set aside doesn’t mean the costs weren’t incurred.

“That’s $471,000 that didn’t have to be spent,” he said.

 

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