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Timothy Masters's $4.1 million settlement: Without it, judge might have ordered a tax increase?

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Yesterday, we told you about a $4.1 million settlement paid by the Eighth Judicial District of Larimer County to Timothy Masters, who spent nearly a decade in jail on a murder beef before being freed based on DNA evidence in 2008.

That's a lot of folding green for a county to pay during a seemingly endless recession -- but according to Commissioner Steve Johnson, the situation could have been considerably worse for the average Larimer County resident had the situation developed differently.

"If it had gone to trial and he had gotten such a large award that we couldn't afford to pay it, the judge could have ordered a tax increase," he says.

According to Johnson, "There could have been a huge financial hit for the Larimer County budget if we'd gone to trial and lost. Now, each one of these cases is different, but our county attorney talked about cases with $12 million or $20 million settlements. Apparently the typical settlements are a million dollars for each year. And we were concerned that the judgment could be very large, and the cost of litigating it could be very large as well."

Two more factors: The county had a $3 million insurance policy, as well as what Johnson refers to as a "risk fund" containing several million dollars more. "It covers court judgments against the county and workers compensation. We're self-insured, and we have a good track record; we've actually paid out very little from that. But if there's a large workers compensation case, you just can't budget for that. And if you set aside a little every year, you can deal with these cases when they come along without destroying your budget."

Hence, the county won't have to scramble to find the $4.1 million it's paying to Masters even during a period of revenue shortfalls. If the cost had been several times higher, however, the options grew increasingly unpleasant.

"Under TABOR [the Taxpayers Bill of Rights], you can't raise the mill levy without a vote of the people -- but a judge can order one," Johnson says. "It's one of the few exceptions to TABOR." The other possibility was "sacrificing county services," he goes on -- but the larger the settlement, and the court costs, the more difficult this approach would be.

As such, Johnson calls the settlement "good for taxpayers, and I think it's good for Mr. Masters, too. He could have lost, and even if he won, it could have gone on for a year or two -- and this reduces his costs as well."

The prosecutors named in the suit are state employees, yet the county was put in the position of having to defend them -- and Johnson says "they didn't like the settlement. They feel they didn't do anything wrong, and they're now denied the chance to exonerate themselves in the court system. But they weren't paying for the defense. We were."

To Johnson, the Masters case represents "a very long, unfortunate story that dates back well before any of the commissioners were in office, or even thought about running for office. I think I was in college. But it's something we inherited, something we had to deal with -- and even though nobody likes settlements, sometimes they're in the best interest of the parties involved. And hopefully it helps bring some closure."

Of course, there remains one very prominent loose end: While DNA evidence cleared Masters, the murder of Peggy Hettrick, the woman Masters was convicted of killing, remains unsolved. "We haven't forgotten about her or her family," Johnson says. "And we certainly want justice in this case."

Just as much as they didn't want a tax hike.

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