February 7, 1990

Mr. John T. Hughes, City Attorney
Municipal Building
1147 Sherman
Sturgis, SD 57785

OFFICIAL OPINION NO. 90-11

Severance pay resolution

Dear Mr. Hughes:

You have requested an official opinion on the following factual situation:

FACTS:

The Common Council of the City of Sturgis, over the mayor's veto, passed a resolution granting severance pay to any department head who is terminated from employment or not reappointed for other than just cause as determined by the Common Council. The Severance Pay Resolution provides for "an entitlement as determined by years of service." The City of Sturgis is governed by the aldermanic form of government.

Based upon the foregoing facts, you have asked the following questions:

QUESTIONS:

1. Does the Severance Pay Resolution impermissibly encroach upon the mayor's prerogative to remove from office any appointive officer pursuant to SDCL 9-14-13?

2. Is the Severance Pay Resolution referable to the electorate in light of SDCL 9-20-19.

IN RE QUESTION NO. 1:

SDCL 9-14-13 provides:

In an aldermanic-governed city the mayor shall have power except as otherwise provided to remove from office any officers appointed by him, whenever he shall be of the opinion that the interests of the city demand such removal, but he shall report the reasons for his removal to the council at its next regular meeting.

The mayor's power to remove appointed officers under this statute is "absolute." State ex rel. Dixon v. Williams, 6 S.D. 119, 60 N.W. 410 (1894); Kierstead v. City of Rapid City, 284 N.W.2d 363 (1976); and Finck v. City of Tea, 443 N.W.2d 632 (S.D. 1989). A mayor does not, however, have the authority to authorize severance pay in an aldermanic form of government. Instead, the governing body of the municipality is charged with fixing "compensation" for municipal officers. SDCL 9-14-28 states:

Except as otherwise specially provided, the governing body of every municipality shall fix and determine by ordinance or resolution the amount of salaries and compensation of all municipal officers and the times at which the same shall be paid.

Based upon this statute, it is apparent that the governing body of a municipality, and not the mayor, has the authority to provide for compensation which could include provision for severance pay.

It might be argued that the provisions of the South Dakota Constitution, Article III, 23 and Article XII, 3 would also apply. Article XII, 3 prohibits the Legislature from enacting laws that grant "extra compensation" to public officers or employees after services have been rendered or a contract has been entered into. Both constitutional provisions prohibit the Legislature from increasing or decreasing a public officer's compensation during his term of office. See, 1972 AGR at 38. Based upon the two constitutional provisions, the Legislature would be able to grant "extra compensation" prospectively only.

The question of whether the two constitutional provisions cited immediately above are applicable to the municipalities as well as to the Legislature has not been answered by our courts. The argument for applicability of the provisions to municipalities is that the Legislature delegates legislative authority to municipalities and that the restrictions on the former should logically be applicable to the latter. While I reserve judgment on the legitimacy of this argument, the city may wish to avoid the constitutional issue by applying the policy of granting severance pay only prospectively, i.e., by applying it only to any persons terminated or denied reappointment after the effective date of the Resolution.

My answer to your first question is therefore no. The city should, however, be aware of the potential problems emanating from Art. III, 23 and Art. XII, 3 of the South Dakota Constitution.

IN RE QUESTION NO. 2:

Until 1986, almost all municipal ordinances or resolutions were referable to the citizens of the municipality. There were, however, two types of activities which were exempt from the referendum process:

1. Acts that would be necessary for the immediate preservation of the public peace, health, or safety, or for the support of the city government and its existing public institutions. State ex rel. Wagner v. Summers, 33 S.D. 40, 144 N.W. 730 (1913).

2. Actions based upon statutes that vest "particular power" in the people who manage a city government. For example, the mayor has authority in an aldermanic form of government to appoint and dismiss employees. Such an appointment or dismissal would not be referable. Baker v. Jackson, 372 N.W.2d 142 (S.D. 1985).

Other than those two situations, all resolutions or ordinances passed by municipal governing bodies were subject to the initiative and referendum process. In 1986, the Legislature enacted two statutes, SDCL 9-20-18 and SDCL 9-20-19 that were designed to clarify the type of municipal activity that would be subject to initiative and referendum elections:

The Legislature finds that in making past grants of decision-making authority to municipal governing authorities, its intent was to grant that authority to the governing bodies of municipalities and that such actions, unless otherwise excluded from the referendum and initiative process by other state law, are subject to the initiative and referendum process. Therefore, the contrary holding in Baker v. Jackson, 372 NW2d 142 (SD, July 31, 1985) is hereby abrogated.

9-20-19. Any legislative decision of a governing body is subject to the referendum process. A legislative decision is one that enacts a permanent law or lays down a rule of conduct or course of policy for the guidance of citizens or their officers. Any matter of a permanent or general character is a legislative decision.

No administrative decision of a governing body is subject to the referendum process, unless specifically authorized by this code. An administrative decision is one that merely puts into execution a plan already adopted by the governing body itself or by the Legislature. Supervision of a program is an administrative decision. Hiring, disciplining and setting the salaries of employees are administrative decisions.

Based upon the 1986 legislative enactment's it appears that the following exemptions now apply to the referendum process for municipalities:

Municipal actions that are "necessary for the immediate preservation of the public peace, health, or safety, or for the support of the city government and its existing public institution" are not referable. Summers, supra at 733.

2. Administrative decisions that are designed to execute "a plan already adopted by the governing body itself or by the legislature." SDCL 9-20-19.

It has been suggested that the resolution you have described would be exempt from the referendum or initiative process under the "administrative decision" exemption. Based upon a review of SDCL 9-20-19, however, it appears that the administrative decision exemption is designed to apply to the implementation of a salary program after it is enacted by the governing body of the municipality. Thus, the resolution you have described would be referable because it is a legislative decision designed to set up a compensation program for later implementation.

In summary, the answer to your second question is yes. The ordinance you have described (for general application on a prospective basis) is a legislative decision, which is referable to the citizens of Sturgis.

Respectfully submitted,

ROGER A. TELLINGHUISEN
ATTORNEY GENERAL

RAT:do