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

DATE: TUESDAY, May 3, 1994                   TAG: 9405040007
SECTION: EDITORIAL                    PAGE: A4   EDITION: METRO 
SOURCE: LEWIS YOUNG
DATELINE:                                 LENGTH: Medium

NO DAMAGE DONE TO FEDERAL RETIREES

Suppose you're in business to provide a service. Let's say you offer a light-housekeeping service for $10 a week to each customer. Among your many customers are Customer A and Customer B. Customer A also provides a service to you - mows your lawn in the summer and keeps your coal-fired furnace stoked during the winter, charging you $20 weekly. Thus, Customer A remits to you $10 a week, and you remit to him $20 a week. One day you arrange a shortcut - you'll remit $10 a week to him and everything will be even-steven. Customer B only indirectly provides you with a service. He works for the local gas company, and you use gas to heat hot water and to cook. You remit your full amount due the gas company; in turn, it compensates Customer B with an appropriate amount.

Customer B learns that Customer A isn't actually remitting to you the $10 weekly for the same service he gets, and he's found an obscure 50-year-old statute that says those in retail trade must charge all their customers the same. The court system, through some circuitous reasoning that only lawyers might appreciate, backs him on it. So, you go back to charging Customer A $10 and he charges you $20. But that doesn't satisfy Customer B. He demands you refund him the $10 a week you ``overcharged'' him, plus interest. Should you be the provider of services, I dare say your comments wouldn't be printable in this family newspaper!

This hypothetical case is exactly analogous to the federal retirees vs. commonwealth of Virginia case, with one exception. Compensation in the latter case was, for many, future rather than current compensation. The facts are clear. Virginia wished to increase its compensation to its employees and retired employees. It chose to do so via forbearance of certain state taxes - for some, now; for some, in the future. This was part of state employees' total compensation package. Forbearance of certain Virginia taxes wasn't part of federal employees' total compensation package. State employees originally got what their employer intended to give them; federal employees got 100 percent of what their employer intended to compensate them. In providing the intended compensation, the state took a shortcut, which the U.S. Supreme Court ruled illegal. But no damage was done. Everybody got what was intended they get.

Federal employees cannot now claim the high moral ground. Those suing for a refund are on the very low moral ground. Anything they get is nothing more than a windfall, and it will be on the backs of the rest of state taxpayers. The settlement should be on the basis of the cost of continued litigation. We can do a lot of litigation for the $234 million offered, and I have a lot of faith in the ultimate judgment of our court system.

Lewis Young of Roanoke works part-time as director of computing for Pamplin College of Business at Virginia Tech.