ROANOKE TIMES

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, February 25, 1994                   TAG: 9402250208
SECTION: VIRGINIA                    PAGE: B-5   EDITION: METRO 
SOURCE: BONNIE V. WINSTON STAFF WRITER
DATELINE: RICHMOND                                LENGTH: Medium


HOUSE OKS TAX PAYBACK FUND

Signaling a desire to end a 5-year-old court fight, the House of Delegates voted 95-3 Thursday to establish a $30 million reserve account for the refund of state income taxes illegally collected from federal and military retirees in the 1980s.

In the Senate, a challenge to an additional $1.6 million appropriation for Virginia Tech's new Center for Organizational and Technological Advancement was defeated.

The bipartisan House vote on the reserve account was a major victory for Gov. George Allen, who has pushed for an out-of-court settlement of the litigation. Until recent weeks, most Democrats and some Republican lawmakers backed continuing the state's long fight against paying any refunds.

In separate $32 billion budget bills endorsed by the House and Senate, Allen also won essentially all he wanted for public safety, economic development and restoring cuts to higher education.

In differing budget plans, the delegates and senators backed pumping millions of additional dollars into colleges and universities, so as to hold tuition increases to 3 percent annually. The bills also would authorize pay raises for state employees, schoolteachers and college faculty; restore funds proposed to be cut from mental hospitals and Virginia Tech's co-operative extension service; beef up community policing efforts; and finance specialized research centers at state colleges.

A major initiative, not proposed by Allen but backed by both the House and Senate, would infuse an additional $102 million into Virginia's public schools to reduce class sizes for kindergarten through third grades, and to establish pre-kindergarten programs for at-risk 4-year-olds.

Until Thursday, the House had been the holdout to Allen's request for the pension case settlement fund. Allen had argued that its creation is critical because tax department figures released last week indicate the state's potential liability has climbed to $707.5 million. Earlier estimates had placed it at about $500 million.

Although the House Appropriations Committee on Sunday refused to include a settlement fund in its budget recommendations, House Majority Leader Richard Cranwell, D-Roanoke County, led the effort for it in Thursday's floor debate.

"We have a significant window of opportunity to do something here," Cranwell said. "And I believe there is sufficient risk to both sides - the retirees as well as the state - that we need to settle this case."

"This clearly indicates both [chambers] are philosophically in agreement that we do need a reserve for settlement of . . . the case," said Ken Stroupe, Allen's press secretary. But until the houses agree on a final budget, "it's too early to declare victory," he said.

Oscar J. Honeycutt Sr. of Richmond, former Virginia president of the National Association of Retired Federal Employees, said Thursday that he is more interested in an actual settlement than a settlement fund.

"They can put $30 million, $60 million in a fund. . . . It doesn't matter. There's nothing on the table for settlement," Honeycutt said.

The House debate, which wore on for roughly five hours, occasionally took on partisan tones.

When House Minority Leader Vance Wilkins Jr., R-Amherst, offered an amendment to cut by 50 percent the budget of Lt. Gov. Don Beyer, a Democrat, House Democrats suggested cutting by 20 percent the budgets of Republicans Allen and Gilmore.

"This is meant to be equity and fair play," said Del. Glenn Croshaw, D-Virginia Beach.

Both amendments were tabled, leaving intact the budgets of all the state's top three executives.

Wilkins had more success with an amendment that would order state college presidents to withhold any benefits, including library cards or ticket-buying privileges for sporting events, from same-sex couples or unmarried male-female couples who live together. It was adopted, 57-38.

The amendment grew out of an attempt by some College of William and Mary faculty to secure health insurance benefits for same-sex couples on the faculty. W&M President Timothy Sullivan rejected the effort, and critics of Wilkins in the House on Thursday suggested his amendment was a political grandstand play.

In contrast to the long, tedious House debate, the Senate finished its budget work in only an hour and with no serious debates.

Sen. John Chichester, R-Stafford, made a brief but futile challenge to an additional $1.6 million appropriation for Virginia Tech's new Center for Organizational and Technological Advancement in Roanoke, calling it the "embryonic stage" of what he predicted will become a major state obligation.

The center is to be housed in the Hotel Roanoke. Chichester recalled that several years ago, when the assembly agreed to Virginia Tech's acquisition of the hotel, members were assured that it would be used essentially as a school for hotel management. Now it's gaining other missions, with other expenses for the taxpayers, he said.

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