Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, December 7, 1994 TAG: 9412070124
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
SOURCE: Associated Press
DATELINE: LENGTH: Medium
``I think it will have an impact in Virginia,'' Michael Kator said of the court's unanimous ruling Tuesday in favor of a military retiree in Georgia.
``It's going to require us to go back to square one and to put more money into this settlement,'' Kator said.
But Gov. George Allen urged retirees to stick with the agreement that the General Assembly approved in a special session this summer.
``It's a very fair deal - not only for Virginia taxpayers, but also for retirees,'' Allen told reporters. The state would owe about $700 million if it had to give the pensioners full refunds plus interest.
Sen. Joseph Gartlan Jr., D-Fairfax County, one of the few legislators to oppose the settlement, said the Supreme Court ruling is ``a very, very significant development, and it's one that could undermine the whole proposition.''
The decision comes a week before Virginia is to mail notices to 159,000 federal retirees telling them how much they would get under the settlement offer. The pensioners must decide individually by Feb. 1 whether to take the money, which would amount to about 87 percent of the taxes they paid. No interest would be paid.
If too many retirees - that is, retirees owed a total of $20 million or more - reject the settlement, it will collapse.
``This decision greatly increases the likelihood that there will be $20 million in rejections,'' Kator said.
He said retirees could ask for more money when the assembly meets in January and pursue their lawsuit, which still is pending before the Virginia Supreme Court.
The assembly already will be grappling with Allen's proposed $2 billion tax cut and the costs of a massive prison-building program.
Retirees taking the settlement would get their first check in the spring. Those who are owed the least would get all their money in about a year, while others' checks would be spread over five years.
The pensioners ``still have a very tough choice,'' Gartlan said.
``If I were a retiree who was not yet locked in, it seems to me I would look at how old I am,'' he said. ``For many of them, enjoying the benefits of any kind of repayment is limited by the grim reaper.''
The U.S. Supreme Court ruled in 1989 that states cannot tax federal pensions if state and local workers' retirement pay is exempt. Most of the 23 states affected by the ruling have settled.
Virginia faced the largest liability because it is home to many retired military and federal employees.
by CNB