Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, February 19, 1994 TAG: 9402190086
SECTION: VIRGINIA PAGE: C1 EDITION: METRO
SOURCE: BONNIE V. WINSTON STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium
Gov. George Allen's office said new figures show the retirees are now owed more than $700 million. Earlier estimates placed the state's liability at around $500 million.
At the same time, Allen dismissed longtime state Tax Commissioner William Forst. The administration charged that Forst knew of the higher liability in December, but failed to disclose it to Allen or his budget chief until this month.
Forst, 61, has been Virginia's tax commissioner since 1971. He was appointed by Gov. Linwood Holton, like Allen a Republican.
"Let me simply say that we feel it unconscionable that the senior tax department official did not inform the new administration or finance director of a liability of this magnitude," said Ken Stroupe, Allen's press secretary.
Forst did not return calls.
Stroupe denied allegations by some legislators that Friday's release of the higher figure was timed to pressure House and Senate money committees to include in the 1994-96 budget $30 million requested by Allen to be applied toward the refunds.
Allen has signaled that the settlement fund is one of his top budget priorities. But already word has circulated that the two Democratic-controlled money panels, which must complete their work on the budget by midnight Sunday, plan to divvy up the $30 million in ways more to their liking.
The U.S. Supreme Court ruled in June that the pensioners are entitled to refunds for income taxes paid from 1985 through 1988. The ruling suggested the state might avoid repaying the money, however, if it had provided the pensioners with a way to challenge the payments before they were made.
Retirees sued the state because Virginia taxed federal pensions while exempting those of state and local government retirees.
In January, an Alexandria judge ruled that the retirees are not due anything, because state law gave them two avenues to contest the taxes before payment. Allen, however, has suggested the state has a moral obligation to settle the case and make some restitution.
While the pensioners have the most to gain from the administration's newest estimates, one of their leaders, Oscar Honeycutt Sr. of Richmond, charged Friday that the numbers were "deliberately bloated" by the administration to "scare the public."
"He's full of prunes," Honeycutt said of the governor. "He wants the public to think it's worse than it is so [the administration] will have a reason not to settle this case."
Honeycutt, former Virginia president of the National Association of Retired Federal Employees, said his group agrees with figures used by the state tax department since 1989 - that the overpayment by the retirees from 1985-88 totals $329.8 million. With interest, the liability rose to $503 million on Dec. 31, he said.
Honeycutt also said an offer by Attorney General Jim Gilmore for the state to pay the retirees 30 cents for each dollar owed shows "nobody's really serious about settling this case . . .
"We'll fight until the last casket's in the ground before we let this go. Somebody better start counting some votes and some dollars, because we're not going to forget this."
Allen's secretary of finance, Paul Timmreck, bristled at suggestions that the numbers had been "cooked." And Timmreck denied that the new figures' release was timed to pressure lawmakers.
He and Stroupe said detailed pension data supplied recently by the federal Department of Defense and Office of Personnel Management were matched in a computer run of state tax returns from the affected retirees.
Gilmore said Friday that he found out about the new $707.5 million liability as his office did legal work in preparation for the bond offering.
A statement released Friday afternoon by Allen's office said simply that Forst had resigned, effective Friday.
by CNB