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

DATE: WEDNESDAY, April 20, 1994                   TAG: 9404200080
SECTION: EDITORIAL                    PAGE: A-10   EDITION: METRO 
SOURCE: By JAY KATZEN
DATELINE:                                 LENGTH: Medium

A WIN-WIN END TO PENSION DISPUTE

ON APRIL 8, Attorney General Jim Gilmore and Gov. George Allen came through on a campaign promise and announced a settlement proposal to begin solving the longstanding pension-tax dispute affecting Virginia's 185,000 federal retirees - a dispute with potential liability to all Virginians of more than $707 million.

I'm one of the federal retirees affected. In my judgment, this settlement is a fair and reasonable conclusion to a dilemma that's plagued the commonwealth for many years.

The proposal is fair because it gives retirees a choice: They may participate in the settlement program and recover 50 percent of their taxes paid on federal-pension income, without waiting for a decision in the court cases and appeals. Or, they may refuse the settlement and take their chances in court.

The proposal's reasonable because it represents a true compromise. The Alexandria Circuit Court ruled this year that retirees aren't entitled to refunds under the U.S. Supreme Court's past decisions. If that ruling's upheld on appeal, the commonwealth pays nothing to retirees.

The Allen-Gilmore proposal allows all of us to reduce our risk. Federal retirees are guaranteed a fair return and a quicker result, if they want it. The commonwealth reduces its exposure to a potentially budget-breaking court judgment.

And remember, too, state government's retirees. Many of them feel their longstanding exemption from paying taxes on retirement income was unfairly taken away from them after the U.S. Supreme Court's Michigan vs. Davis decision. They ask: Why favor federal retirees?

The attorney general inherited this problem that has festered for five years. I've not forgotten that I was offered nothing by the previous administration.

Is the settlement proposal perfect? No. Few such compromises are. However, the new administration hasn't shirked its duty. It has responsibly proposed a solution. Everyone won't take it, but it will enable federal retirees who want a partial refund to accept one - money that otherwise might not have been provided.

Gilmore and Allen pledged in their campaigns that federal retirees and non-retiree citizens of Virginia should be treated fairly. The settlement proposal keeps that pledge.

As Virginians, we know the importance of those who've dedicated their lives to public service. At this time, it's important for all of us to come together and take a good look at this opportunity. By accepting 50 percent of the taxes paid on federal-pension income, federal retirees would enable the balance to go to desperately needed programs - including many, such as education, health, law enforcement and transportation, to which we devoted our professional careers. Federal retirees would win, and so would Virginia.

Jay Katzen is a Republican member of the House of Delegates from Warrenton.

by CNB