He saved pension system

November 11, 2001|By C. Fraser Smith

IN THE winter of 1984, one Maryland legislator saved the state's pension system, preserved its elite borrowing power and ended a threat to the state's fundamental solvency.

One man, one vote, one history-making moment.

The legislature's bipartisan fiscal leadership gets credit for these accomplishments, but they were blocked until one citizen legislator did the right thing.

Treasurer Richard N. Dixon, an African-American Democrat then representing conservative Carroll County in the House of Delegates, stepped up while others cowered in fear of a powerful lobby.

His vote - his abstention, actually - allowed an epochal pension reform bill to reach the House floor. Maryland's retirement fund needed $16 billion to be capable of paying the pensions an earlier legislature had foolishly promised. It was so generous - offering unlimited cost-of-living adjustments, for example - that state unions, led by the teachers, wanted to save it.

They were furious that benefits they had negotiated were being withdrawn. A breach of faith, they declared with some justification. They mounted an unprecedented campaign to kill the bill. Without Richard Dixon they might have succeeded.

Backed by then-House Speaker Benjamin L. Cardin and then-Gov. Harry R. Hughes, the bill drew teacher lobbyists from all over the state and seemed dead in the Appropriations Committee, held there on a tie vote. Legislative leaders were unable, after weeks of cajoling, to win a single defector. Finally, they appealed to Delegate Dixon.

A stockbroker who understood better than most legislators how vulnerable the pension system was, he nevertheless had promised his constituents not to support any change in the generous plan.

The Maryland State Teachers Association had shown in earlier elections that its forces could bring down even the most powerful legislators by putting envelope stuffers and phone callers to work against those it targeted. Many members of the assembly were as convinced as Mr. Dixon that something had to be done. They voted no anyway. "I like it down here," said one.

But what if you could have it both ways?

What if Mr. Dixon abstained in the committee, someone suggested to him, breaking the tie and allowing the bill to the House floor, there to rise or fall by vote of all the members? He could vote against the bill then and keep his promise. Transparent, you may say, but effective.

The MSTA continued its effort, convincing many legislators to defy the governor and the usually invincible Speaker Cardin (now a member of Congress). A comfortable margin for passage melted dramatically as the climactic vote approached. The bill failed at first when another delegate abstained, creating a tie - one vote short of a majority. In a second try, it passed on the strength of pork applied to Baltimore delegates who switched to the reform side.

In the next election, teachers worked against the highly regarded Robert R. Neall's campaign for Congress, helping to defeat him - and to elect a basketball player with no record of legislative service. A banker and respected financial thinker, Mr. Neall had been an outspoken advocate of the bill. Worth every penny of the price he paid, he says.

Mr. Dixon survived and was later elected treasurer. Some say he's been too aggressive an investor, some say too passive - but the overall results are striking. Seventeen years ago, the fund was $16 billion short of meeting its obligations. Some said it would be 2020 before the system was fully funded, even with reform's reduced benefits. But thanks to a robust economy the goal was reached last year, 20 years ahead of schedule.

Mr. Dixon did not accomplish this feat by himself. Nor is he solely responsible for recent losses. He's under some pressure now to revise the investment strategy so its performance can be even better. This issue is important because, now, the system's benefits are among the least generous in the country. The man from Carroll could come full circle if he led a prudent drive to increase these payouts.

Overall, Treasurer Dixon deserves more credit than he likes to give himself - quite a feat for a political figure, you might say, and even more so for a man who calls himself the best treasurer in the land.

Politicians are always being asked, "What have you done for me lately?" From Richard Dixon, you could get quite an answer.

C. Fraser Smith is an editorial writer for The Sun.

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