Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, April 23, 1994 TAG: 9404250164
SECTION: VIRGINIA PAGE: C-3 EDITION: METRO
SOURCE: Associated Press
DATELINE: RICHMOND LENGTH: Medium
Cranwell, D-Roanoke County, outlined the idea at a public hearing on Attorney General Jim Gilmore's proposed $234 million settlement. Gilmore's proposal would pay the pensioners 50 cents for every dollar they paid in state income taxes from 1985 through 1988.
Instead, the state could invest the $234 million in a trust fund, Cranwell said. With interest, the fund would double over 10 years. That would allow the state to refund all of the $468 million in disputed taxes.
"This is not a proposal," Cranwell insisted after the public hearing. He said he presented the information, compiled by an accounting firm, as "an illustration that the expertise exists to fashion a reasonable settlement."
Federal retirees, who have called Gilmore's offer insulting, did not fully embrace Cranwell's idea but said it was a good start. The idea of a 10-year payout had little support, however.
"We would look at a four- to six-year time frame," said retired Army Col. William F. Wollenberg, state legislative chairman for the Retired Officers Association. "Our population is not getting any younger."
Michael Kator, the lawyer for more than 400 federal retirees who sued the state, agreed.
"I think the notion of waiting until $234 million grows to $468 million is not going to fly," he said.
House Speaker Thomas Moss, D-Norfolk, said the trust fund is a cheaper way to make full refunds, "but maybe they don't want to wait so long" for the money.
Cranwell said the trust fund would at least allow the low-income retirees to get full refunds - a priority stated by many pensioners at public hearings around the state.
And higher-income retirees would get "significantly more than 50 cents on the dollar," even in a payment period of less than 10 years, Cranwell said.
Gilmore touted his proposed settlement Friday in a letter to Cranwell, saying he "would find it difficult to recommend another course."
He wrote that "as attorney general for the taxpayers of Virginia, I would be disappointed if an effort to win the support of more of the retirees resulted in a greater financial burden for the taxpayers."
But that, he said, "is a determination that the General Assembly may make."
Neither Gilmore's proposal nor the scenario outlined by Cranwell include paying any interest on the taxes. Interest would swell the obligation to more than $700 million.
"I still think there's some room in the negotiations for some interest," said Wollenberg, who has said the case could be settled for $575 million.
Gilmore's proposal was criticized by the majority of federal retirees attending the public hearings Wednesday through Friday.
Gov. George Allen said Friday that he still believes Gilmore's offer is fair, but he is willing to listen.
"I don't think it's appropriate for government to ever be closed-minded or close its ears to the people who are affected," Allen told reporters.
But he said it is essential that a settlement be reached this year, and "it can't be funded with wishes and hopes. It has to be settled with real money."
Allen had proposed $59 million in budget amendments to pay the first installment of Gilmore's settlement offer, but he withdrew them Wednesday and will allow legislators to come up with the money some other way.
by CNB