NYC Reservists Face Steep Payback

GENERIC: Iraq, War, Soldier, Soldiers, Troops
CBS/AP
More than 1,600 military reservists who took a leave from city jobs to go on active duty after the 2001 terrorist attacks now face repaying months or years of their salaries under a deal initially designed to help them weather the financial stress of their deployments.

When the city employees — mostly police officers — were called up by their reserve units, they each faced the suspension of city pay and benefits while they served.

In a bid to help out, the city proposed a plan to keep those benefits intact by allowing the workers to keep getting city paychecks, as long as they agreed to pay back either their city salary or their military pay — whichever was smaller — when they returned to work.

Nearly everyone took the deal.

But now the employees are being asked to make good on their salary refund promise, and in some cases they are being asked to pay back more than they took home.

The problem, officials said, is that the veterans are obligated to repay their gross salaries, even though a third of that pay went to taxes and other deductions.

The reservists can also get reimbursed for those taxes, but will need to do so through their tax returns, said Martha Hirst, city commissioner of administrative services.

In an additional complication, the city has been calculating stipends the reservists received for military housing and food as part of their military pay, dramatically increasing the total they now owe.

For some workers, the tab can run as high as $200,000. The police department expects to recover $15 million, said Assistant Police Chief Michael Collins.

The city began pressing for the money this week, with hundreds of police officers receiving letters with their paychecks warning them that they must either make payment arrangements within 15 days, or face legal action.

City officials have already waited several years in some cases to begin collecting the money, but some of the police officers said the delay hurt more than it helped.

After hearing nothing from the city for so long about their extra salary, they assumed it would never be collected and stopped saving.

"Like most middle-class Americans, you get a windfall, you fix the roof and the sidewalk and pay off credit-card debt," Michael Donohue, a police sergeant, told The New York Times. Donohue, a sergeant major in the Army Reserves, said he owed the city about $100,000.

The City Council will consider a resolution Monday asking Mayor Michael Bloomberg to eliminate the housing and food allowances as military income, thus lowering the tab for some workers.

The city also plans to give its workers accounting help to sort out any financial problems, and Hirst said the city would work out "very friendly repayment agreements."