Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, January 1, 1994 TAG: 9401010068
SECTION: VIRGINIA PAGE: C-3 EDITION: METRO
SOURCE: Associated Press
DATELINE: RICHMOND LENGTH: Medium
But Harper, an Arlington resident who worked for the U.S. Department of Agriculture, is still waiting for his case to be resolved in his home state of Virginia.
"When I started, I had one foot in the grave, and now I have two. They better hurry up," joked Harper, 72.
With some 200,000 retired military and civilian federal workers, Virginia faces the largest liability of any state entangled in the tax dispute. If the pensioners prevail, the state may owe them nearly $500 million in refunds and interest.
Harper, lead plaintiff in the retirees' lawsuit, is optimistic that Republican Gov.-elect George Allen will fulfill his campaign promise to settle with the pensioners.
Allen, who takes office Jan. 15, has yet to make a specific proposal.
"That's something we'll determine in the weeks and months to come," he said.
Democratic Gov. Douglas Wilder also promised a settlement, but his budget proposal for the next two years sets aside no money for the retirees.
"It's very difficult to do that while you're in litigation," Wilder said.
Alexandria Circuit Judge Donald Kent heard arguments in October on whether state law requires refunds. He has yet to rule.
The case already has produced a U.S. Supreme Court ruling that persuaded other states to settle with their retirees.
The high court ruled in 1989 in a Michigan case that it is unconstitutional for states to tax the pensions of federal retirees while exempting retired state and local workers. The ruling affected 23 states.
The Virginia lawsuit followed because the court did not make clear whether retirees were owed refunds. The court ruled in June that refunds must be paid unless the state has an adequate procedure for taxpayers to contest taxes before they are paid. Virginia says it does; the retirees disagree.
The Georgia Supreme Court ruled Dec. 3 that Georgia does not owe refunds to pensioners, who plan to appeal to the U.S. Supreme Court.
Court cases are also pending in New York, Kansas, North Carolina, Kentucky and Mississippi.
Settlements have been reached in Alabama, Arkansas, Arizona, Colorado, Iowa, Louisiana, Michigan, Missouri, New Mexico, Oklahoma, Oregon, South Carolina, Utah and West Virginia. Negotiations are under way in Wisconsin.
The Montana legislature recently killed a refund plan because lawmakers said the state didn't have enough money for the retirees.
"It's a matter of time. I think eventually all the federal retirees are going to win these cases," said Pete Forgione, state legislative coordinator for the National Association of Retired Federal Employees.
In Virginia, retirees were particularly irritated that Wilder proposed giving refunds to self-employed people for part of their Social Security and Medicare taxes.
"Governments have a way of saying they can't afford to do something, but they always seem to find money for what they want to do," said Oscar Honeycutt, a former Virginia president of the federal retirees group.
Honeycutt and Harper said they would be satisfied with either cash refunds or tax credits over a few years. The average refund would be about $3,000.
Harper suggested the refunds go first to retirees who are ailing or in nursing homes.
"There are a lot of these people who don't have much money coming, and they really want the money," he said. "They really are in bad shape."
by CNB