Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, June 1, 1994 TAG: 9406010081
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: By DAVID M. P0OLE STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium
Most said they would be willing to accept a $340 million settlement brokered by House Majority Leader Richard Cranwell, D-Roanoke County, and supported by the governor.
Alexander White, a 77-year-old retired postal supervisor, drove with a group from Roanoke to hear firsthand about the plan, which promises to reimburse most federal pensioners for all the taxes they paid from 1985 to 1988 under a state policy that later was declared unconstitutional.
White said he liked the proposal because pensioners with smaller claims would get refunds without having to wait.
"I think it's fair," White said. "There are some folks who need this money."
Leaders of retiree groups held a news conference to endorse the plan, which would repay federal and military pensioners over five years, with the first installment coming in early 1995.
The deal would cost the state $60 million the first year, then $70 million over each of the next four years. Cranwell said rising state tax revenues should cover the costs without significant cuts in state programs.
Joining the retiree leaders at the news conference were Cranwell, Republican Attorney General James Gilmore and a bipartisan delegation from the House of Delegates.
Absent, however, were representatives of the state Senate.
Senate Finance Committee Chairman Hunter Andrews, D-Hampton, said the Senate would take its time to review the House plan.
House Speaker Thomas Moss, D-Norfolk, said he thought the legislature could reconvene sometime in the "next two weeks" to approve the settlement.
The settlement would bring to a close a tax controversy that helped sink Democrat Mary Sue Terry in last year's gubernatorial campaign and had the potential to cripple the state budget.
The tax issue dates to 1989, when the U.S. Supreme Court ruled it was illegal for states to tax the pensions of former federal workers while at the same time exempting pensions of former state employees.
More than 400 federal pensioners living in Virginia banded to sue the state for back taxes that, with interest, totaled more than $720 million.
In April, Republicans Gilmore and Gov. George Allen sought to make good on a campaign promise to settle the tax litigation by offering pensioners half of what they paid in, without interest.
But the Republicans' initiative failed. Retirees were peeved that Allen and Gilmore did not consult them before making what many pensioners perceived as a "take-it-or-leave-it" offer. The General Assembly rejected the $240 million deal last month.
Into the void leapt Cranwell, the legislature's consummate dealmaker. He met privately with the leaders of several of the largest retiree groups over several weeks to hammer out the basic outline of the settlement offer presented Tuesday.
The key to the deal, Cranwell said, was persuading retirees that any settlement would have to be fair to both pensioners who were owed money and taxpayers who would have to foot the bill.
"All they wanted was what was fair," he said.
by CNB