Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, September 16, 1995 TAG: 9509180060
SECTION: VIRGINIA PAGE: A1 EDITION: METRO
SOURCE: DAVID M. POOLE STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium
"I think that some of them who took the settlement without looking at it closely now wish they had," Raleigh said.
Friday, the Virginia Supreme Court ruled the state must repay illegally taxed retirees in full, plus interest.
The ruling came too late for 154,000 pensioners who earlier this year accepted a General Assembly offer of 75 cents on the dollar over five years, with no interest.
Raleigh, a Virginia Beach resident, would have gotten $3,225 if he had taken the state's deal. His patience will pay off. He'll get about $8,000: the $4,300 the state owes him plus an estimated $3,700 in interest.
Attorney General James Gilmore, who made settling the pension dispute a campaign promise, insisted that the settlement offer was a good one. Those who took it got a certain return without the risk that the court could have ruled the other way.
Gilmore said his office was reviewing the high court's decision, but indicated at a news conference that an appeal is unlikely.
When a reporter from Virginia Lawyers Weekly noted that the court decision left virtually no room for appeal, Gilmore said, "I think that's very insightful."
Writing for the court, Chief Justice Harry L. Carrico said a review of state law and a U.S. Supreme Court decision in a similar Georgia case led to ``the inevitable conclusion that the... taxpayers are entitled to full refunds.''
It remained unclear how the General Assembly could come up with the $77.9 million it will take to repay the 14,283 retirees affected by the court's decision.
But the interest clock is ticking, with each month of delay adding to the final cost.
"They've got an incentive to pay it sooner than later," said Michael J. Kator, a Washington-based lawyer who represented several dozen retirees in the legal fight. "I don't know where the state is going to get $80 million, but that's not my problem."
Gov. George Allen said he would await Gilmore's advice before acting, but added: ``If we owe it, we're going to pay it. That's all there is to it....It means you'll just have to reduce expenditures elsewhere.''
The increased pensioner obligation will make it that much more difficult for Allen to deliver on a promise to cut state income taxes and to return $300 million in state lottery proceeds to localities.
Allen already faces some daunting obligations as his staff prepares its spending recommendations for 1996-98. There is the $110 million for the settlement with the rest of the federal retirees, an estimated $400 million for an increase in the school-age population, and at least $200 million for pre-fund obligations to the state retirement system, according to House Appropriations Committee figures.
Allen said he did not want interest for the retirees covered by the Supreme Court decision to make the debt any larger.
Gilmore applauded the 154,000 retirees who took the settlement, saying they did their role by "reducing the burden on Virginia's taxpayers," who otherwise would have had to shell out $800 million.
Raleigh, the military retiree from Virginia Beach, found it hard to believe the state would ask retirees to settle for what amounts to less than 50 cents of principle and interest.
Imagine, he said, if the roles had been reversed with a group of citizens refusing to pay taxes for a number of years. If the citizens later admitted wrongdoing, would the state accept only partial payment?
"If you believe that, you still believe in the Easter Bunny and the Tooth Fairy," Raleigh said.
by CNB