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

DATE: THURSDAY, April 14, 1994                   TAG: 9404140061
SECTION: VIRGINIA                    PAGE: C3   EDITION: METRO 
SOURCE:    DAVID M. POOLE STAFF WRITER
DATELINE:                                 LENGTH: Medium

IT MAY BE HALF OR NIL FOR RETIREES

RICHMOND - Retired federal and military employees may face a half-or-nothing decision if the General Assembly agrees to a partial refund of the $468 million in state taxes illegally collected from federal pensioners from 1985-88.

Federal retirees could accept the current offer of 50 cents on the dollar. The average refund would be $1,500.

Or retirees could gamble that the Virginia Supreme Court will require the state to make full refunds, plus interest. But if the court ruling goes against them, they would come up empty-handed.

"That's the roll of the dice they'll have to make," said Don Harrison, a spokesman for Republican Attorney General Jim Gilmore.

Rose Musumeci, president of the Virginia chapter of the National Association of Retired Federal Employees, said Wednesday that it was `fundamentally evil" for the state to force pensioners into such a decision.

Musumeci said her group would push the General Assembly, which convenes for a one-day veto session Wednesday, to sweeten the offer made last week by Gilmore and Gov. George Allen.

Under the Allen-Gilmore plan, the state would pay $234 million in equal installments over four years. Retirees who refused the offer would lose their right to recover unless they filed suit in Richmond Circuit Court by Sept. 15.

Those who took the litigation route could end up with nothing if the Virginia Supreme Court, which has agreed to hear a lawsuit filed by pensioners, rules the state is not required to pay refunds, Harrison said.

The U.S. Supreme Court has ruled that the state erred in taxing the pension benefits of federal workers because it did not tax the pensions of state employees.

Leaders of the National Association of Retired Federal Employees - which represents about 10 percent of the state's 186,000 federal pensioners - said they felt betrayed by Allen and Gilmore, who promised during last fall's election campaign to settle up with the retirees.

Keywords:
GENERAL ASSEMBLY 1994

by CNB