THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, December 14, 1994 TAG: 9412140424
SECTION: FRONT PAGE: A6 EDITION: FINAL
SOURCE: BY DAVID M. POOLE, STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium: 57 lines
The state's proposed $340 million federal pension settlement suffered another blow Tuesday when the Allen administration lowered its estimate of the amount of refund each retiree would receive.
Retirees whose pensions were taxed illegally from 1985-88 would get back 76 cents on the dollar, down from an earlier estimate of 88 cents on the dollar.
``Certainly it's bad news for the retirees,'' said William F. Wollenberg, a retired Army colonel from Petersburg who helped negotiate the settlement offer. ``I'm not sure how people are going to face it. They feel they are being jerked around a little bit.''
Gov. George F. Allen insisted that the offer is still a fair deal for some 169,000 federal and military pensioners eligible for refunds.
``I certainly would encourage retirees to take advantage of getting this money,'' Allen told reporters.
The downward revision in the settlement proposals comes a week after a U.S. Supreme Court decision in a related Georgia case. Some interpret the decision as giving federal pensioners hope that they could sue Virginia for full refunds, plus interest.
Allen cautioned, however, that those who reject the state's offer may have to wait years to find out whether the high court decision will translate into a windfall.
``It's a sure thing,'' he said of the state's offer. ``You don't have to squander money on attorneys' fees and years of protracted litigation.''
The state taxed retiree pensions under a policy that was later ruled illegal. The U.S. Supreme Court declared that the state could not tax federal pensions while exempting the pensions of state workers.
Confusion over the amount of refund each retiree would receive stems from a Nov. 18 briefing by the state tax department. A preliminary review of claim requests led tax officials to say they expected that each retiree would get about 88 cents for every dollar paid.
Tuesday, tax officials said a final accounting put the figure at 76.5 cents for every dollar.
The state will mail the settlement offers on Friday. Retirees will have until Feb. 1 to respond. If retirees representing at least $20 million opt out, the deal is called off unless the General Assembly reauthorizes it by March 1.
In an effort to encourage retirees to take the deal, House Majority Leader C. Richard Cranwell and representatives from retiree groups will hold a series of news conferences around the state Thursday.
Oscar Honeycutt, a retired federal worker from the Richmond area who helped broker the deal, said he would stand by the settlement offer, even though it appears less sweet than it did a few days ago.
``I still think it's a good deal,'' Honeycutt said. ``I haven't seen the Supreme Court give any money to anyone yet. If the court case continues, I can see three years before Virginia can do anything.'' by CNB