After three years as city manager and a number of recent performance reviews by city council, Eugene Palazzo resigned his position at the March 19 City Council meeting. The Galt Herald recently received the separation agreement. His severance package included six months of regular pay plus over $19,000 in back sick leave and vacation pay. Palazzo walked away with $110,846.29 in his pocket.
The new city council just over 90 days after being elected to schedule his first review in March. More performance reviews were then scheduled – all in closed chambers, as required. A municipal code also requires a new council to wait 90 days before terminating a city manager after an election.
Palazzo gave his resignation effective in early April after his March 19 announcement he was on vacation, making March 19 his last day in the office.
Palazzo made over $167,000 for each year of service. At the time of his hire, he was given $7,500 just to relocate from Crescent City to Galt. In addition, Palazzo received $300 a month as a car allowance. For his three years as a city of Galt employee, he will net over $600,000. His final pay and severance was $91,468.80 in addition to $2,319.87 in unused vacation and $17,057.62 in unused sick leave, for the grand total of $110,846.29.
Palazzo gave no reason for his departure, and council members have been tight lipped about his exit, leaving residents to speculate as to who actually initiated the separation and why.
According to his original employment contract, the city manager is an “at will” employee, meaning council members could release the administrator with or without cause. However, the contract stipulates that, if they choose to terminate the employee without cause, “the city shall provide employee the opportunity to resign in lieu of being terminated, and the parties shall cooperate regarding public announcements regarding employee’s separation from the city.”
If terminated from office without cause, the contract grants the city manager a severance benefit equal to what the City Council agreed upon with Palazzo – cash payment equivalent to six months of his current monthly base salary and the accrued sick and vacation pay. In return, Palazzo agreed to release any claims against the city, council members or employees and agreed not to sue any of those parties.
Although the employment contract signed in December 2015 said the cash payout would be prorated over the six months, Council agreed to one cash payout April 4.
Palazzo’s resignation came less than a year after Finance Director Emily Boyd resigned in late July 2018. Boyd worked with Palazzo in Crescent City and was hired in Galt by Palazzo a few months after his own start date. Boyd left with a $50,000 severance package of her own.
In a presentation to council in June 2018, Boyd informed council members that deferred maintenance could finally be addressed with a $4.4 million unassigned funds surplus. In November of last year, Palazzo told council there would not be funds to address any of the deferred maintenance and that the June presentation “misrepresented” the finances. Then, in February, the audit report from the consulting firm came back with four negative “findings”, including months of unreconciled bank statements.
Bonnie Rodriguez contributed to this article.