Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, July 1, 1993 TAG: 9307010398
SECTION: VIRGINIA PAGE: C4 EDITION: STATE
SOURCE: BONNIE V. WINSTON STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium
The money, in checks averaging $400 to $500 from the Virginia Retirement System, began arriving in mailboxes Monday.
As a letter mailed to the pensioners in late May obliquely explained, the payment is intended to offset two and a half years of state taxation of their retirement benefits. But representatives of more than 200,000 federal retirees, who are fighting in court to get back taxes and interest of up to $467 million they paid the state, are hopping mad.
"This is a double standard," said Ernest F. Kerekes, Norfolk-Virginia Beach vice president of the National Association of Retired Federal Employees. Virginia is "circumventing the intent of the U.S. Supreme Court. That's the honest-to-God truth," he said.
In 1989, after the Supreme Court struck down Virginia's policy of taxing federal pensions while exempting those of former state employees, the General Assembly agreed to tax all retirement benefits equally. That increased the tax bills of state pensioners, so the assembly decided in 1990 to increase their pensions by an equal amount. It has taken until now to figure how much the state pensioners should receive.
Donna M. Blatecky, assistant director of the VRS' benefit programs and services, said the state pensioners are getting $6.3 million for the 1990 tax year, the same amount for 1991 and $3.15 million for the first half of 1992, for the total of $15.75 million.
The money, she stressed, is from VRS' coffers, not the state general fund. And anyone who was a VRS beneficiary from 1990-92 is entitled to a share, even if they didn't owe tax on their retirement income, she said. If the retiree has died, his or her estate gets the benefit.
The payment covers only two and a half years because the legislature changed the tax law again in 1992, voting to pay more of the retired state workers' health insurance premiums rather than continuing higher benefit payments. Though the extra benefits ordered in 1990 had never actually been paid, "We looked at the legislative intent and consulted with the attorney general, and determined we still had an outstanding liability to the retirees,"Blatecky said.
On Monday, as the pensioners started getting their bonuses, VRS' phones rang wildly.
"People wanted to make sure they were really entitled to it," Blatecky said.
Five hundred calls were logged on Monday alone, and 300 to 400 pieces of mail have been received.
"It's a complicated issue," Blatecky said. "Yes, it is like Christmas in July. Some people wrote to say, `Thank you.' "
But not everyone is pleased.
Federal retirees, who have sued the state for $467 million in refunds and interest for taxes they paid from 1985-88, argue that the payments amount to continued discrimination against them.
In mid-June, the Supreme Court ruled that the federal pensioners may be due tax refunds but said further hearings are necessary in the Virginia Supreme Court.
Attorney General Stephen Rosenthal says no money is owed, but Gov. Douglas Wilder suggested Monday that a settlement with the federal workers may be warranted. A spokesman for Rosenthal declined comment Wednesday.
"This kind of bears out what we've thought all along," said Oscar Honeycutt, former Virginia president of the National Association for Federal Employees. ". . . They didn't have to do this. This was voluntarily done by the state. But we've got the court that says pay us the money, and yet they're bucking us."
Memo: shorter version ran in the Metro edition.