Desperate times call for creative, even creepy measures

Desperate times are producing extreme — but creative — measures at the state Capitol.

One is HB 1380, a bill that would allow the state and local governments to bet that thousands of teachers, cops, street-sweepers and pencil-pushers in Georgia will drop dead before their time.

The legislation declares that public pensions have “an insurable interest in any individual who is an employee of the state or political subdivision.”

Retirement systems would be permitted to take out life insurance policies — called “dead peasant” or “dead janitor” policies by some — on the employees and retirees they cover. If a janitor or teacher crossed the River Jordan, the policy payout wouldn’t go to the surviving spouse or children. The cash would go into the pension fund itself.

Many find the idea creepy. Others say dead-janitor policies can shore up the increasing cost of employee benefits, which have become a heavy drain on governments — particularly in the city of Atlanta. The bill would allow employees to opt out if they object. In writing.

It’s a serious proposal. The sponsors are House Appropriations Chairman Ben Harbin (R-Evans) and Rep. Mark Burkhalter (R-Johns Creek), the former House speaker.

One could say, entirely in jest, that this is an opportunity for the Legislature to turn layoffs into a highly profitable enterprise. But that would be cruel.

Then there’s the case of Gov. Sonny Perdue, who was in danger of becoming an irrelevant cipher once the Legislature left Atlanta.

But the Legislature rescued the two-term governor from his lame-duck status this week, assigning Perdue — and a few others — the task of rewriting the state’s tax code.

Even after he walks out the door in January, Perdue could very well be the face and voice of the largest overhaul of the tax system in state history.

Until he exits the Governor’s Mansion, Perdue will certainly control the facts and stats to be crunched by him, four economists, former Gov. Zell Miller, the leaders of the Georgia Chamber of Commerce and the state chapter of the National Federation of Independent Business, and a few others.

Their recommendations, once approved by a special, Republican-dominated leadership committee of the Legislature, would bypass the normal committee system and go straight to the House for an up-or-down vote. Upon passage, the Senate would be faced with a similar decision.

If it blows up, the mess can be blamed on a long-gone governor.

Lt. Gov. Casey Cagle and House Speaker David Ralston say the effort is modeled after the congressional approach used to close U.S. military bases across the country.

One reason for this extraordinary effort is the state’s AAA bond rating, which allows the borrowing of money at cheap rates. It is a legacy from years of Democratic rule that Republicans have been able to maintain — a prized symbol of competence.

But bond rating companies have quietly warned that, while Georgia is in better shape financially than many other state governments, its finances are built on tax revenue streams that run hot and cold. And Wall Street hates uncertainty.

Losing that AAA bond rating would carry a terrific political price.

Senate Majority Leader Chip Rogers (R-Woodstock) gave strong hints of how Georgia’s tax burden is likely to shift. “We have a broken property tax system that’s a relic of a 19th-century agrarian economy,” he said. Rogers thinks the state’s income tax is too closely tied to unemployment to be reliable. He and other Republicans have been eager to dump the corporate income tax for years.

Which leaves an obvious target. “We have a sales tax system that exempts more products and services than it actually taxes,” Rogers said.

And that brings us back to 78-year-old Zell Miller, whom the lawmakers want to join Perdue in the tax rewrite. Why?

Because Miller knows the state budget and is not tied up in a political campaign, said House Majority Leader Jerry Keen (R-St. Simons Island). But Keen was being disingenuous.

The Capitol’s GOP leadership wants Miller for two reasons. First, among Republicans, the former governor and senator is a living saint. Secondly, Miller is an essential part of Georgia’s tax history.

Fourteen years ago, Miller pushed through the sales tax exemption on food. A sales tax on food is the kind of reliable revenue stream that Wall Street respects. Taxes on real estate are vulnerable to bubbles. People without jobs don’t pay income taxes. But everyone has to eat.

And if Republicans want to reinstate the sales tax on food, it would be nice to have an endorsement from the man who lifted it.

“I have a call into Governor Miller,” Ralston told reporters. “As you know, his health has not been the best lately, so we’re waiting to hear back from him.”

For instant updates, follow me on Twitter.

40 comments Add your comment


March 20th, 2010
4:13 pm

How much are they willing to bet and who will put the money up? Follow the $$$$$


March 20th, 2010
4:46 pm

The dead peasant plans sound like they are insuring the wrong thing. An employee who dies young relieves the former employer of the burden of paying his or her benefits. They need to insure themselves against too many employees living too long.

For example, my grandmother is 95. She is still receiving a widow’s pension for my grandfather, who retired in 1974 and died in 1989.


March 20th, 2010
5:21 pm

….would be permitted to take out life insurance policies…insurance? Hmmmm. Ox,,,,,,Hmmmm. Naw….no way you think?

church of the painful truth

March 20th, 2010
5:32 pm

Let the citizens of this state bet on which legislator will be elected this year. Have a large pool (controlled by the lottery)to fund the DEAD LEGISLATOR FUND.They can have a 10% admin.fee expense to offset their overhead.ALL PROFITS GO TO THE GENERAL FUND as revenue.WE have an”insurable interest in any individual who is elected to run this state” LET’S bet on the GOOD OLE BOY’S at the gold dome.Have a scratch off ticket on the Governor race.One for the Dems. and one for the repubs.I LOVE IT!!!!!

Rotting Corpse

March 20th, 2010
6:06 pm

The “dead peasant” scheme isn’t about refilling the state or local government coffers with money from death benefits (although that thought alone is unseemly enough, since it gives an added incentive to reduce health care for aging employees or retirees). Instead, it’s about funneling premium payments to an insurance company–a sweetheart deal of sizable proportion, considering the number of teachers, police, firefighters, and other public servants whose lives are to be “insured.” And those premiums won’t be paid out of the state general treasury, either–they’ll be ripped off from the public pension funds. Certain folks have long and greedily eyed those pension funds, viewing them as a pot of gold for the taking, never mind the fact that those funds are supposed to be held in trust for the employees who contributed to them out of their own paychecks.

As Deep Throat said, “Follow the money.” In this case, the money flows out to the insurance company.

church of the painful truth

March 20th, 2010
6:15 pm

What are the ties to insurance for the two sponsors of this bill. Plus someone find out what has been given to these two by the insurance lobbyist.As Deep Throat said “Follow the money”

church of the painful truth

March 20th, 2010
6:27 pm

On the subject of revising the state tax code – Zell please don’t help these Repubs down at the state capital.You will be left holding the bag in years to come.Your approval on revisions,not ours(repubs)will be said over and over again.


March 20th, 2010
7:48 pm

Soylent Green. It’s the only way to be sure.

Keep doing this GOP

March 20th, 2010
7:54 pm

Just another example of the GOP wanting to shift the tax burden from the wealthy to the middle class. The corporate income tax is only 500 million dollars out of a 17 billion dollar budget. And they already get sweetheart deals from the state. And i would not trust Purdue or Miller as far as revising the tax code. People without jobs also can not buy food. They go to the food pantry to get it. So that idea will not work.

As far as the insurance proposal goes, sounds like another derivitives scam to me. Whos to stop other people buying insurance on these employees, betting when they are going to die. I can just see it now, doctors being accused of leaking medical records of employees to the state so they can buy insurance polices like credit default swaps, betting when the employees are going to die.

If i was these two men, i would be so embarrassed by proposing this , i would resign.


March 20th, 2010
9:16 pm

Wait…so these GA GOPers want to set up a program that would give them incentive to see people die?

Explain how this shouldn’t create more outrage than those death panels that we were assured were coming…


March 20th, 2010
9:29 pm

Incredibly stupid.

Actuarial science is not rocket science.

I suppose these lawyers don’t know that the house sets the odds and the house always wins.

Your daughters friend,



March 20th, 2010
9:38 pm

Fascinating – a raging liberal, Michael Moore, puts out a movie about the evils of Capitalism and one of the most disturbing parts of the movie is when Wal-Mart is exposed for using the “dead peasant” system for benefiting from the death of their own employees. Now it shows up as a way the State can benefit from the deaths of people who work there out of a sense of loyalty – most of them at a pay rate of about 1/3rd of what the private sector pays – when the private sector has jobs.

I guess our great State is the government equivalent of Wal-Mart. Now I think I understand that trip to China last year by the Governor when the financial dominoes first started to fall.

This is Mrs. Norman Maine

March 20th, 2010
9:42 pm

“Even after he walks out the door in January, Perdue could very well be the face and voice of the largest overhaul of the tax system in state history. Until he exits the Governor’s Mansion, Perdue will certainly control the facts and stats………”

Oh my God.

Oh God, oh God, oh God, help us. Help us all. Perdue is going to control this, oh somebody pleeeeeze help us!!!!!!


March 20th, 2010
9:47 pm

The legislators must not understand insurance. They should start selling it instead of buying.

Let’s hope the tax reform doesn’t come to fruition, although it would be good to let the many visitors, crooks and cheats start paying something. Enforcing the current code should bring in additonal revenue. I suspect there is quite a bit of noncompliance going on with the anti-tax crowd running things.

Yeah, everyone has to eat, but by taxing food you’re taking it off of the table of many poor children.

Old Gene

March 20th, 2010
10:11 pm

Let’s take out insurance to see how many of these creeps are reelected.

Ambrose Bierce

March 20th, 2010
10:20 pm

“The legislators must not understand insurance. They should start selling it instead of buying.”

Oh, but they DO understand insurance. And they DO sell it. Just check out the “dead peasant” bill sponsor’s line of work.

young gene

March 20th, 2010
10:20 pm

oh they will all be (relected that is) as long as they have an R by their name. If they have a D by their name, they’ll prolly lose. Doesn’t matter what you do in Georgia, you have that R and they can’t touch you.

This article surprised me, i thought the repubs were going to change the constitution to let Perdue run for a 3rd term. Perdue’s a great example of abadoning the D / switching to the R and getting elected.

Michael G.

March 20th, 2010
10:26 pm

College athlatic departments all across the country are doing the same exact thing. Big money boosters will take out a big insurance policy that says when they die, the money will go to the university. As long as the person agrees, you could take an insurance policy out on pretty much anybody. What’s the big deal?

church of the painful truth

March 20th, 2010
10:29 pm

Look at the positions the two supporters hold.One was the Speaker of the House for one day. The other is chairman of the House Appropriation.Fine outstanding gentlemen.Oh happy days we live in.

[...] Republicans in the Georgia legislature who just introduced a bill (HB 1380) to take out “dead peasant” life  insurance policies on state employees.  What kind of morbid ish is that?  Basically the state would make money off a state [...]

Alabama Communist

March 21st, 2010
12:21 am

LOL! These Republicans haven’t got a clue now that the State and Nation is coming unglue with scam tax plans by them….If they were smart, they would ban the Republican Party and themselves from the State and move to Costa Rico….

Crooks Rule

March 21st, 2010
12:41 am

The Ga politicians are in the pocket of the insurance lobbyists—they will do whatever told, as long as they get paid.

If you are smart

March 21st, 2010
1:00 am

you would be a conservative republican and reduce the size of government and control spending.It is time to get these bafoons and demidiots out of office….


March 21st, 2010
1:59 am

Have you ever wondered why Walmart hires “greeters”? Workers are commoditized via COLIs, Company Owned Life Insurance policies.

Crooks Rule

March 21st, 2010
8:27 am

Sonny needs to start another fishing initiative in his home town, to get the Ga economy going again!!! Direct some more taxpayer millions down there to his buddies—it worked great last time!!!!


March 21st, 2010
9:06 am

Seriously, maybe the state should self-insure its employees. With auto, home, accident, health, renters, long term care and life insurance it would be able to recoup a big part of payroll. And when it needed to pay a claim the payment could be delayed until funds were available.

Will Jones - Atlanta Jeffersonian Exegesis

March 21st, 2010
9:17 am

If our public servants established justice in Our Land, as they’re supposed to, the coffers would be overflowing from divine Providence’s blessing our endeavors.

As it is they’re merely space fillers serving the false elite fascist plutocracy…who can’t even hang Bush and Cheney when everyone knows they committed 9/11…everyone that is except the papists and the bathroom stall perverts they hire to be our politicians.


March 21st, 2010
10:18 am

Meanwhile, they are apparently ignoring alcohol and tobacco taxes still……

Galloway got one thing wrong

March 21st, 2010
11:00 am

The bill would require the EMPLOYEE to pay the policy premiums for a policy that benefits someone not of the employee’s choosing. WTH??!

A few things these idiots should think about:

1. Who pays the premiums in the time between when the vested employee leaves government to work at some other place of employment for 10+ years and when they reach retirement? You can’t make someone pay for something when you have no relationship with them.

2. How do you make a retiree pay the premiums for the policy when that requirement was not part of the pension plan at the time they entered into the pension contract (on the day of their employment)?

3. No insurance company will insure an unknown risk. How will government employers pay for the HIPPA privacy violation lawsuits for giving private health information to the life insurance companies in order to establish the life insurance policy?

4. Employees who are not in a pension (that’s right, some Atlanta employees are not in a pension but, instead, in a 401(k) type plan) will likely sue if they are forced to fund the PENSION shortfall by paying for a dead peasant policy on themselves or if there is a pattern of firing employees who opt out of paying for a policy. How will Atlanta pay for those lawsuits?

Don’t make the mistake of thinking that all of the “peasants” have the education level of a janitor.

Crooks Rule

March 21st, 2010
11:22 am

Taxes are way too low! The government needs a ton more taxpayer cash for new programs, initiatives in hometowns of legislators, etc. Pay up–raise the income tax rate to 10%—it will be well spent by the political leaders—they’ve got a long list of things to buy!

church of the painful truth

March 21st, 2010
11:30 am

Think about this! The legislators who drafted this Bill are making the decisions on the future of this State. We are in deep you know what. I agree lawsuits will be flying all over the place.

church of the painful truth

March 21st, 2010
11:50 am

The State Employees Retirement system and the Teachers Retirement system has just lost a class action suite in Fulton county.The suite brought by the retirees cost the systems Hundreds of millions.They(the systems)were trying to screw the retirees in payments.If this passes,I forsee another class action.

Just a taxpayer

March 21st, 2010
12:07 pm

Until legislators across the country begin to examine the liability of having Retirement systems that allow employees to retire with full benefits at 34 years of employment (think about it, a State of Georgia employee can retire at 52 if they started at age 18 with up to 90% of their highest salary), we are going nowhere as a state or country.

Throughout the last few years there has been a mantra of hiring high priced leaders, commissioners and managers in state government with the statement that we need to compete with the private sector. That’s fine, but if government is going to compete for the type of leadership the private sector commands, then they need jettison the retirement and benefit structure that used to separate public service from the private sector. There are a tremendous number of mid level management positions in state government that pay $80k – $110k (Source: Open Georgia)

Of course this comment is heresy among rural Georgia legislators (REP and DEMS) and would be a poison pill for any politician seeking re-election.

church of the painful truth

March 21st, 2010
12:35 pm

Just a taxpayer—FYI the state retirement old plan you are refering to was changed in 1982.This new plan pays only 60% if you work 30 years .In 2009 the state retirement plan was changed again to only a 401k plan for all new employees.Was there abuse in the old plan? YES.My wife started as a state employee in 1985 at a salary of 16,000.00 per year for a accounting Tech.She is a middle manager now in a large state agency at a salary of 55,000.00 per year.25 YEARS OF DEDICTED SERVICE at one state agency.By the way she also pays 4.5% of her salary each pay period toward her retirement. She has taken 6 days without pay since Sept.2009.Her health insurance has gone up over 15% in the last two years and at the same time benefits have decresed. No Pay increase in the last 3 years.Yes you have abuse,but it is always politics.

All Great Ideas are from Texas, Right?

March 21st, 2010
12:48 pm

Excerpt from LA Times, Jan. 25, 2004:

Retired Teachers Get an Education in Life Insurance

In Texas, a firm would profit off the policies, and a state retirement plan, not families, would be the beneficiary.
Scott Gold, Times Staff Writer

HOUSTON — Outraging the education community, Texas is considering allowing a large financial firm to take out life insurance on retired teachers, cafeteria workers and bus drivers. A state retirement plan would be the beneficiary of the policies, the financial firm would make millions on the transaction, and families of the retirees would get nothing.

Former U.S. Sen. Phil Gramm, now an executive at UBS Investment Bank of New York, is promoting the proposal….

Many education workers, who learned about the concept after meetings between Gramm and top Texas officials, say the proposal is morbid and potentially a bad business deal. They say Texas would effectively wind up with a financial interest in the timely death of its retired education workers.
“It is gruesome and ghoulish,” said Patricia Olney, 67, a retiree in Brenham, Texas, who taught for 27 years. “They want to profit off our deaths, and we don’t appreciate it.”

UBS executives project that they could earn tens of millions of dollars on the Texas transaction. Sources close to Gramm say he has made it clear in meetings with state officials that he and his company view Texas as a pilot program. If the concept works, UBS hopes to take the insurance program nationwide.

Gramm, a Republican senator from Texas for 18 years who stepped down in 2002 and became a vice chairman of USB, declined to comment for this story.

Some officials close to the negotiations say UBS and state officials have been stung by the rapid and widespread backlash from education workers, and say the proposal’s chances are shaky because of the negative response.

UBS issued a statement calling the proposal one of “dozens of new and innovative products” it produces each year, and said it is “exploring the feasibility” of piecing together the financing package for “various state and local government entities.”

According to UBS executives and documents used by Gramm in his presentations, the financing arrangement would work like this:

UBS would float bonds on the market. Proceeds would be used to buy annuities, probably through UBS PaineWebber Inc., which, like UBS Investment Bank, is a division of UBS Warburg. The annuities would pay for insurance premiums for policies taken out on retired education workers. When the workers die, proceeds from the insurance would be used to retire the bonds, among other things.

Portions of the money left over would be funneled into the Texas Teacher Retirement System’s health-care fund. The profit margin would hinge in part on assumptions made about mortality rates for people 75 years and older.


Insurance analysts said they believed the Gramm proposal represented a subtle but significant shift of “dead peasant” tactics from the private to the public sector.

“These things are under attack in the private sector,” said J. Robert Hunter, a former Texas insurance commissioner who is now the director of insurance for the Washington, D.C.-based Consumer Federation of America. “To move it into the public sector makes no sense. These are not legitimate vehicles for fundraising.”


March 21st, 2010
2:09 pm

The Republicans want to kill off state government and state employees–literally.
There are a zillion public policy reasons why a corporate or public entity (or both working together as so-called “public/private partners”) should NOT be allowed to pass a law that grants them a financial stake in whether you live or die and without your individual consent.
What a HUGE incentive to decrease health care benefits to retired and current state employees.
Millions of bucks in play here as premiums for the politicians to hand out to their favorite charity–themselves–and their insurance company backers.
It is absolutely dumbfounding to witness the machinations of these Georgia Republicans. They won’t stop until they have completely gutted state government and Georgia’s economy and quality of life. Their specialty is recycling failed ideas and ideology from the ’80’s and ’90’s. Dead Peasants Insurance. Murdering government so you can hand out taxpayer money to your cronies under the guise of “privatization” or “public/private” partnership. They’ve had eight long years to destroy everything they touch, and desperately want to finish the job, whether or not they still hold elected office.


March 21st, 2010
2:53 pm

Looking at the proposed changes included in HB 1380 and seeing all the weasle words in it, the only way such a bill should fly is if there INFORMED CONSENT of the insured to the fact that he/she is granting an insurable interest potentially worth (a stated amount of money) to the state and that the employee/pensioner CANNOT BE DENIED EMPLOYMENT OR ANY OTHER BENEFITS if he/she DECLINES to grant an insurable interest to the state to the life insurance proceeds. It is most assuredly not fair or reasonable to put the BURDEN ON THE EMPLOYEE or person receiving pension to OPT OUT, in writing,
“within ten days after such policy is delivered to the state, political subdivision, or public retirement system “–whatever THE HECK that means. Way too much ambiguity and over-reaching.

Galloway got one thing wrong

March 21st, 2010
5:27 pm

n, they could write in something that would say that the employee cannot be denied employment or any other benefits for declining the coverage. But all that will do is to encourage the mercenaries in Human Resources to be more creative in how they get rid of employees who won’t go along with this garbage. A salaried employee who refuses to grant the government vampires the right to profit from their death will suddenly find that their work load triples, that they get the worst work assignments, that they are given assignments on Fridays at 5pm that are due on Monday at 8am and that previous good performance evaluations are suddenly followed by poor evaluations. In other words, they will find a way to run off the employees who won’t subsidize the taxpayers with their very lives. And, just think about the number of old government buildings that have asbestos in them; what incentive is there for the government to protect the employees in those buildings when, instead, they can profit from their early death?

Stand up and fight back or get ready to get punked.


March 21st, 2010
9:33 pm

No spell check. Make that “weasel” words (above)

| Gold Dome Live

March 22nd, 2010
12:31 pm

[...] Speaker David Ralston (R-Blue Ridge) and Lt. Gov. Casey Cagle announced last week that Gov. Sonny Perdue will lead a commission that will study a planned overhaul of the state tax [...]