The city's top attorney, Solicitor George A. Nilson, said he offered to research whether city officials could be repaid for costs associated with a lengthy investigation into City Hall corruption after a conversation with Dixon and others last summer.
"I looked at the prior record and realized that there wasn't any clear policy," Nilson said. "I just thought it made a whole lot of sense to spell it out."
The draft policy - which could take effect in about a month if approved by the city Board of Estimates - is modeled in part on a provision in the state code that allows reimbursement only for state officials who are cleared of charges, Nilson said. The state prohibits payment to those found guilty of offenses.
Dixon, he said, did "not disagree" with the plan to develop a reimbursement policy, though he said he has not spoken with her about it since his research began. Ian Brennan, a spokesman for Dixon, declined to comment.
The Democratic mayor was indicted this month on 12 counts, including taking gift cards meant for the needy, lying on her ethics disclosure forms and misuse of office after a nearly three-year investigation by the Office of the State Prosecutor. She says that she is innocent of all the charges.
Defense attorneys said it is difficult to estimate Dixon's defense costs, noting that attorneys vary their rates, but several guessed the total would reach six figures.
Del. Jill P. Carter, a Baltimore Democrat and defense attorney, said she opposed the idea of tax dollars going toward legal fees because "there is no limit to what the lawyers can charge." Reimbursement might be appropriate, she said, if an official can show a prosecution was motivated by ill will.
Dee Hodges, head of the Maryland Taxpayers Association, said officials charged with crimes should rely on public defenders.
Dixon's mayoral salary is $151,700 a year, and she has retained two of the city's most prominent defense attorneys, Arnold M. Weiner, who has his own firm; and Dale P. Kelberman, a partner at Miles and Stockbridge.
Neither would comment on how much they are charging or whether they plan to seek city funds for payment.
The city could be asked to pay legal fees for other employees who retained private lawyers but were never charged. That could include as many as half a dozen private lawyers hired to represent various city employees during the investigation.
The legal bills could come as the city struggles to close a $36.5 million budget shortfall by June. Next year's shortfall is projected to be nearly twice as large. Police commanders have closed down specialized units to save money, and fire officials are considering rotating firehouse closings. Dixon has also said that city workers could face layoffs or furloughs.
Nilson is circulating his draft policy among city leaders, though not the mayor, and expects to bring it to the city's Board of Estimates - which the mayor controls - for approval within a month. If a policy is adopted, any bill over $5,000 would need separate Board of Estimates approval.
Estimates board member Joan M. Pratt, the city comptroller, was briefed yesterday on the new policy and said it is in the "deliberative stages."
"I think there should be some policy, as opposed to operating by a case-by-case basis or by the seat of your pants," Pratt said. "There should be some guidelines."
City Council President Stephanie C. Rawlings-Blake, another board member, said through a spokesman that she would review "best practices in other jurisdictions before making a decision."
"She thinks it should be fair to the parties involved while also protecting the taxpayers," spokesman Ryan O'Doherty said.
The new policy could also affect Councilwoman Helen L. Holton, who was charged this month in a separate indictment with bribery, perjury and misuse of office. Holton, who makes $58,425, is represented by Joshua R. Treem. Neither she nor her attorney returned phone calls.
A former city housing chief also pleaded guilty to theft this month, though since he has admitted guilt he would not qualify for reimbursement as the policy is currently drafted.
At least a dozen current and former city employees have been interviewed by the state prosecutor as part of the investigation, and some of them have retained private attorneys. Some City Hall employees "were clearly mere witnesses," Nilson said. "In those cases, the law department would perform a hand-holding function. Sometimes accompanying them to be interviewed by the state prosecutor."
So far, nobody has submitted their legal bills to the city, but at least one lawyer has informed the city that he will. Another attorney is offering service pro bono, Nilson said. He would not say who.
The Maryland code allows for reimbursement of "reasonable legal fees" if a state official is investigated for a crime connected to his or her official duties and if he or she is cleared of the charges.
There is a catch: The attorney general and the Board of Public Works are allowed to question witnesses and review the criminal investigation before approving payment of fees. That can be a problem, Nilson said, because the public works board "can go off in a political direction."
Dixon supporters explored creating a legal defense fund for the mayor last summer, but that plan was never enacted, said one source close to Dixon.