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

DATE: FRIDAY, December 16, 1994                   TAG: 9412160051
SECTION: VIRGINIA                    PAGE: B-7   EDITION: METRO 
SOURCE: WARREN FISKE STAFF WRITER
DATELINE: RICHMOND                                LENGTH: Medium

TAKE DEAL ON REFUND, GROUPS SAY

"I am wholeheartedly in favor of settling this," said Oscar J. Honeycutt, a former president of the state chapter of the National Association of Retired Federal Employees. He warned that continued litigation for a better deal would be lengthy and that many retirees might die before receiving refunds.

John C. Chapman, president of the Military Retirees Taxpayers Association, agreed. "This settlement will guarantee that we will be repaid in five years," he said. "If we don't take it now, I don't think I'll ever see that money in my lifetime."

The pensioners were joined by House Majority Leader Richard Cranwell, D-Roanoke County, who toured the state on Thursday urging federal retirees to accept the settlement.

The dispute stems from the state's former policy of taxing the pensions of federal retirees while exempting the pensions of former state employees. The U.S. Supreme Court has ruled that states must have identical taxation policies for both groups.

From 1985 to 1988, the state collected about $458million in wrongly assessed taxes on federal pensions. The retirees and state political leaders negotiated a settlement this year for a $340million refund.

About 169,000 federal retirees are eligible for the refund. They have until Feb. 1 to accept the deal.

A U.S. Supreme Court ruling this month has left some Virginia retirees wondering whether they could get a better deal. The high court ruled that Georgia must refund 100 percent of the money, plus interest, in taxes it illegally collected from federal pensioners.