Treasurer Dixon quits over illness

Carroll Democrat blames diabetes

leaving post Feb. 1

Praised as `a pioneer'

Md. pension system soared, then tumbled under his investing

January 18, 2002|By Michael Dresser and Sarah Koenig | Michael Dresser and Sarah Koenig,SUN STAFF

State Treasurer Richard N. Dixon, one of the most powerful figures in Maryland government, said yesterday that he will leave office because of worsening diabetes.

Dixon's surprise departure opens one of the three seats on the Board of Public Works, where he often cast the decisive vote on major state contracts.

His resignation also ends his rocky reign as chairman of the state employee pension system, which he led through years of growth before it staggered to a $3 billion loss last year. He leaves amid contention over his investment strategy and sometimes imperious leadership.

Dixon's decision set off a flurry of speculation over who the General Assembly would choose to succeed him as treasurer when his resignation takes effect Feb. 1. The early favorite of many lawmakers appeared to be Del. Nancy K. Kopp, a Montgomery County Democrat.

Senate President Thomas V. Mike Miller said he and House Speaker Casper R. Taylor Jr. would name a joint committee today to evaluate applicants. Taylor, who some have speculated wants the job, said he is not interested.

Dixon, 63, made his announcement at a news conference in Annapolis where he leaned on a cane, appearing tired. He said diabetes had forced him to have a toe amputated and that he became blind in one eye more than a year ago.

The former stockbroker and decorated Vietnam veteran said that when he took office in 1996, he routinely worked from 8 a.m. to 6 p.m. "I'm finding I can't continue to work at that pace," he said.

Dixon's retirement caps a long and in many ways remarkable career in state government. He served 13 years in the House of Delegates, winning election four times as a black Democrat in an overwhelmingly white district in conservative Carroll County.

When he was elected treasurer in 1996, Dixon became the first African-American to sit on the Board of Public Works, which reviews most large state contracts. The comptroller and governor also serve on the board.

"Throughout his career he has broken down barriers, earning recognition for both his performance and leadership," said Gov. Parris N. Glendening. He praised Dixon as "a friend, a professional and a pioneer."

Turn toward governor

Dixon formed an alliance with Comptroller William Donald Schaefer to thwart Glendening on key issues that came before the board. But in mid-2000, after hearing complaints from legislative leaders, he switched sides and has generally supported the governor.

Dixon's support of Glendening enraged Schaefer, who subjected the treasurer to public abuse at board meetings. Dixon generally bore Schaefer's tirades stoically but would occasionally lash back - once accusing the comptroller of acting like a "quirky clown."

Schaefer seemed to verge on an apology in a letter to Dixon yesterday. "We have had differences, but my respect for you never lessened," Schaefer wrote. "My only regret is having possibly caused you pain or discomfort in the performance of your duties."

Schaefer, vice chairman of the pension system's trustees, automatically becomes chairman when Dixon's resignation takes effect. The 14-member pension board could elect someone to complete Dixon's one-year term, which ends in June, or leave Schaefer in place until then and vote on a successor, said Peter Vaughn, executive director of the pension system.

Since the structure was established in 1982, the chairman's job has been held by either the comptroller or treasurer. That is not a requirement, Vaughn said. The chairman need only be a trustee.

Schaefer did not respond to a request for comment yesterday. His spokesman, Michael D. Golden, said he did not know if Schaefer wants to be chairman of the pension system on more than an interim basis.

In recent months, Dixon has been embroiled in controversy over his stewardship of the $28.4 billion pension system.

When Dixon became treasurer, he also became vice chairman of the pension board. The bullish former Merrill Lynch broker pushed the board to increase its investments in the stock market. Two years later, upon the death of longtime Comptroller Louis L. Goldstein, Dixon became chairman - further increasing his influence over the pension fund's investments.

Some board members complained that Dixon ran the board in a dictatorial manner, a stark contrast from Goldstein's collegial style. But Dixon succeeded in pushing the board in the direction he wanted it to go - taking greater risks in search of higher returns.

The strategy paid off - for a while. In the fiscal year that ended June 30, 2000, gains in the stock market pushed the pension system's assets over $30 billion for the first time. Twenty years ahead of schedule, the plan was fully funded.

But the aggressive strategy backfired the next year, when the system lost $3 billion and was rated last in a national ranking of the investment performance of large public pension plans. The tumble exposed Dixon to second-guessing from legislative leaders and weakened his control over the board, which has moved to undo some of his policies.

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