After receiving complaints of “excessive pay and favoritism” with procurement services in the small town of Interlaken, Utah State Auditor Tina Cannon released a report on July 28 determining their credibility.
Cannon examined the compensation history for contracted employee pay increases, procurement escorts related to the contract for the town’s public works manager, contracts and invoices by the town’s public works manager and applicable Town Council meeting minutes.
What she found described Interlaken — a Wasatch County town established in 2015 with fewer than 200 residents — as having improper contracts for municipal services and possible noncompliance with the Internal Revenue Code. In other words, Cannon found a misclassification of employees and contractors within Interlaken’s operations.
The issues center around the town administrator and public works positions.
Interlaken operates under a five-member Town Council, with Interlaken Mayor Greg Harrigan filling one seat, and maintains “minimal staffing by contracting out” the town administrator and public works manager positions. Town administrator Bart Smith has held the position since 2017, while the public works manager, Derek Becker, who was hired in 2024, owns an excavation company that has regularly performed work for Interlaken since 2023, according to the report.
“The town indicated they ‘hired’ for these positions, however, the facts indicate these two positions are contractor-vendor relationships rather than employer-employee relationships,” the auditor’s report states.
Cannon recommended that the town cancel the two contracts and obtain the services in compliance with state policy or hire employees. She also recommended that the town consult with legal counsel to determine whether the town administrator and public works manager should be classified as traditional employees rather than independent contractors.
The town did the latter, Harrigan said.
“It’s much ado about nothing, frankly,” Harrigan said. “The procurement policy we should have had … it was kind of overlooked when we became a town.”
That’s because Interlaken was so small when it was established, he said. Harrigan said he has lived in the Interlaken area for about 26 years, before incorporation. His goal since its creation and since becoming mayor was to “keep costs down.”
Harrigan said he is “very comfortable with everything” the town officials do and is planning on addressing the recommendations outlined in the state auditor’s report. He said the town already has a “robust and transparent” financial reporting system available online.
“We’re just open book,” Harrigan said.
But he said he agrees the procurement policy needs to be addressed.
“That’s something we’re working on,” Harrigan said. “We totally understand we should have that.”
Harrigan said the issues related to hiring practices are challenging, and that it doesn’t make sense for Interlaken to transition to hiring employees instead of contractors. The shift, Harrigan said, would cost the town more than it’s worth.
“Our goal will be to make sure we are meeting all of the (state’s) requirements,” Harrigan said. “Our lawyer’s interpretation is that we are contractors instead of employees. We would like to avoid having employees.”
He said that’s because Interlaken, which he described as a “teeny-tiny town,” does not have the capacity to hire employees, who often work more hours for higher pay.
“Spending that kind of money just to change the codification … it just seems wasteful,” Harrigan said.
Cannon contacted Interlaken officials in July and gave them two weeks to respond to the report. Harrigan said the town asked for more time to better respond to the auditor’s findings.
“The office continues to have concerns that the town administrator and public works manager positions may be misclassified as independent contractors,” the auditor’s report states. “As noted in our report, both positions appear to involve ongoing, indefinite relationships that are integral to the town’s core government operations.”
Cannon wrote those factors “continue to raise concerns” regarding the “appropriateness” of employee versus contractor classifications.
Harrigan said the town will continue to consult with legal counsel on the matter to abide by state code wherever possible.