Golden parachutes
The following is adapted from my email newsletter. To subscribe, click here.
Your property tax rate needs to come down. And as you know, the city doesn’t control your property valuation, but this Administration has worked hard over the years to lower the rate you pay.
But pretty much everyone understands that there is some level of taxation that is necessary to ensure public safety, good streets and infrastructure, quality parks, and a strong economy.
In other words, when we talk about taxes, it’s not always about the money. It’s about how your money is spent. It’s about creating an efficient government. And it’s about value.
On the flip side, it is incredibly aggravating and unacceptable when your city government wastes your money — especially on something like a “golden parachute” severance payment for a government employee.
Unfortunately, this is exactly what is happening at Dallas City Hall.
To recap, the city manager is leaving Dallas City Hall after seven years — a long tenure, for sure. WFAA reported shortly after he announced his resignation — in an anonymously sourced story that no one has actually denied — that his departure came about after he privately told a city councilmember that he wanted to leave, and then worked with councilmembers to orchestrate getting a majority of the council to secretly go behind closed doors and suggest that he resign.
Why? Because this would trigger a severance clause in his contract. This clause calls for paying out a year of his salary — about a half million taxpayer dollars — in the event of an “involuntary separation.” Specifically, the language states that the severance will be paid as a result of a “resignation following a suggestion, whether formal or informal, by a majority of City Council that he resign.”
Within days, the city manager was announced as a finalist for the same job in Austin. A few weeks later, he was hired there. Now, he is leaving early to go south on Interstate 35.
I wish him the best. Contrary to the false narrative pushed by some, the city manager and I were getting along just fine — as he told WFAA — despite different perspectives on the importance of significantly lowering taxes, drastically improving permitting, and substantially increasing the city’s parks and green spaces. And Austin is a tough job, one with a whole different set of politics. In addition, and to be clear, he is not the first city manager to have a severance clause. Other cities have paid large severances to city managers, although not in this way — and not to someone who was already lining up a job somewhere else.
The Trouble with Golden Parachutes
None of that makes this situation any easier to swallow as a taxpayer. This is still about your money — and it’s not a pittance. A half million dollars is more than twice a typical person’s 401k at retirement age. It’s more than the median home value in Dallas. And it’s more than 10 times what the lowest-paid city employees make in a year.
Of course, it’s easy to understand why the city manager would want to receive that golden parachute payment (although it’s terribly unclear why city councilmembers went along with the idea).
Really, no one should have had the opportunity to engage in this backroom maneuvering in the first place. This flimsy severance clause was the doing of the previous mayor and City Councilmembers.
It was a curious decision for them to make. In theory, severance clauses are meant to make City Councils think twice about moving to dismiss a city manager over frivolous issues or for purely political reasons. But the structure raises a slew of unanswered questions. Why was the clause not at least written to be phased out after five years, when the city manager had vested in the city’s pension? Why was it a full year’s salary? Why “formal or informal”? What is a “suggestion” that he resign? Why didn’t the clause demand that the City Council at least have a closed executive session to discuss whether the city manager should resign?
The fact is that the clause, as written, created an incentive for things to shake out exactly like they did. And that leaves you, the taxpayer, to foot the bill without even forcing the City Council to get together to discuss it first.
This simply shouldn’t have happened this way. At the very least, it shouldn’t happen again in Dallas — or anywhere in the state. The Texas Legislature ought to take the step to protect taxpayers by forbidding these golden parachutes for city employees in any locality in the state.
Until then, as the search for a new city manager continues, it’s time for the Dallas City Council to take a stand by definitively stating that there won’t be a golden parachute clause in the next city manager’s contract.
Providing Value
If the City Council wants to borrow any compensation concept from the corporate world, it should instead consider something akin to performance bonuses.
Here’s the idea: The City Council could incentivize performance from the next city manager, based on key metrics that actually matter to people. If the city meets its 911 response time goals, the city manager earns a bonus. Another year of violent crime reduction? A bigger bonus. Cut wait times for building permits by 50%? Get rewarded. Find a way to trim budgets to reduce property tax rates again? Well, the city manager can keep a portion of the savings. It would be a win-win.
This approach also requires the City Council to set real tangible goals and priorities for the city manager, which would be a very good thing. The performance evaluation process for top city employees has been far too nebulous and unfocused. Judgments are based too often on general vibes and feelings about a person rather than on actual performance.
Such a process would also make the goals transparent to the public. You would know exactly what the City Council actually values because they would have to set real metrics for the city manager to obtain additional compensation. As a result, the City Council and the city manager would need to focus City Hall on responding to the actual needs of Dallas residents.
Heck, if, through this approach, the city manager ended up earning twice as much in a year as the previous one as a direct result of demonstrably improving core city services, cutting waste and inefficiencies, and improving public safety, then wouldn’t you take that deal? People should be rewarded for excellence as they are providing for it — not because their services are no longer desired.
Because, ultimately, this is how your city government should be spending your money: on protecting your interests and building a safer, stronger, and more vibrant Dallas.
That’s all for today. Thanks for staying engaged, and stay tuned for more updates. Have a great weekend, and stay safe!
