Button disagreement

[Freaky J]

this is a weekly no limit holdem game tournament style. Its a low buy in at a Legion, but its a small town and has a very home game like feel.
anyways, the button disagreement is about when a small blind or big blind busts out. when the small blind busts out the player on the button keeps the button and deals again. when the big blind busts out the button moves and there is only a big blind, no small blind. this is what i think is right and this is how we do it most of the time. there is one guy who insists that the button allways moves and there is both a big and small blind, even if it means that someone gets to skip paying a blind that round. To alot of people that way seems fine and they want to do it that way, but when someone explains how the other way its keeps the blinds in order everyone, even if they don't fully understand it, go along with it no prpblem. most people there are there more so for the social aspect then to make money (me included). the one guy who always insists on doing it the wrong way says thats how they do it at the casinos and if someone misses paying a blind thats just the way it works lucky for them. this guy isnt stupid and does play alot at casions and knows the difference between cash games and tournaments. i think this guy is lying just to get out of paying a blind, i know thats hard to belive anyone would do something like that, but if anyone would it'd be him. i know there's another way its done to keep the blinds equal for everyone where sometimes someone is the button and a blind and theres two small blinds or two big blinds. this way it seems needlessly complicated, and still its nothing like what this guy is talking about.
ok finally my question is whats the offical rule on button and blind placment when something like that happens? do different tournaments have different ways of dealing with this? there is no way this guy is right, any half ass organized tournament is going to have some way of keeping the blinds equal for everyone in a situation like that, right?