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Gov. Glenn Youngkin is attempting a major overhaul of Virginia’s pending two-year budget instead of vetoing the full spending plan the Democratic-controlled General Assembly sent to him last month.
This story was reported and written by our media partner The Virginia Mercury
The Youngkin administration announced a package of 233 budget amendments Monday, saying the governor has removed all tax increases and dropped the tax cuts he suggested in his original budget proposal late last year.
At a data-heavy news conference that also included presentations from several cabinet officials, Youngkin pitched his new plan as an effort to accommodate Democratic spending priorities without raising taxes.
“That is what finding common ground is all about,” Youngkin said, striking a newly conciliatory tone weeks after he blasted Democratic lawmakers over a spending plan the governor dubbed “the backward budget.”
The governor’s new proposal also includes 3% raises for teachers and state employees in both budget years, reflecting the policy Democratic leaders laid out in the budget they approved in March.
The full details of Youngkin’s proposal weren’t immediately clear Monday because the actual text of what the General Assembly will be asked to vote on wasn’t made available.
After listening to Youngkin’s remarks Monday, Senate Majority Leader Scott Surovell, D-Fairfax, said the presentations left his side with “a lot of questions.”
“We have serious questions about whether or not this budget can be structurally balanced,” Surovell said. Youngkin holding a news conference to stress his desire to work together, Surovell added, was “a distraction from the record number of vetoes this governor has issued.”
The Youngkin administration said its suggested budget changes translate to a general fund of roughly $64 billion, nearly $1 billion higher than what the governor laid out in his December proposal and approximately $1.5 billion less than what the General Assembly approved. Even without the proposed expansion of the state sales tax to cover digital purchases like music downloads, streaming services and software, Youngkin said his plan allows Virginia to allocate more funding for “collective priorities” like K-12 schools, higher education, public safety and mental health.
The administration said it was able to come up with a balanced plan largely by shuffling how and when some projects are funded and reducing the amount of money allocated to K-12 and higher education in comparison to the General Assembly’s budget.
“It wasn’t that we eliminated, we just grew things slightly slower in a few areas,” Youngkin said.
Youngkin also suggested eliminating spending tied to legislative proposals he’s vetoed, such as a $15 minimum wage and retail marijuana marketplace.
The governor’s rollout of his budget amendments avoids the more drastic scenario of a budget veto, which would have escalated the heated partisan sniping between Youngkin and Democratic legislative leaders who won majority control in last year’s General Assembly elections.
The next step in the process is for the legislature to take up Youngkin’s proposed budget overhaul on April 17, when lawmakers return to Richmond to act on the governor’s vetoes and amendments to the budget and other bills.
Here are the highlights of the budget changes Youngkin is asking the General Assembly to consider:
Tax policy
After making tax cuts a major theme of his 2021 campaign and his first two years in office, Youngkin said he has “stepped back from that” and is now asking for Virginia’s tax policy to be left as is.
In return, Youngkin said he’s asking Democrats to “please come in and have no tax increases.”
“That’s our most important common ground spot,” the governor said.
Surovell noted that Youngkin is now insisting on no tax increases after the governor himself suggested expanding the sales tax to digital purchases.
“The modest tax modernization that we had in our last proposal was necessary in order to get the revenues to support that level of service,” Surovell said.
Youngkin had proposed the digital sales tax as part of a broader policy package that also included a reduction to Virginia’s income tax rate. However, he has stressed he would not support a plan that ends up raising taxes overall and has portrayed the digital sales tax as a way to partially offset the cuts he proposed.
RGGI
The governor’s budget proposes changing the language in the legislature’s budget to block the state from re-entering the Regional Greenhouse Gas Initiative, a carbon market aimed at incentivising reducing carbon emissions.
The market requires electricity producers to purchase allowances for the carbon they emit. Those revenues are returned to the state, where, in Virginia, they are funneled for flood resiliency and energy efficiency efforts. In the commonwealth, utilities are allowed to recover those purchase costs from their customers.
Youngkin had the state exit the market through a regulatory action at the end of last year because of the “hidden tax” he said it imposes on ratepayers. Democratic lawmakers and environmental groups have contended that the move needs a legislative change, and participation in the regional carbon market has led to unprecedented amounts of funding for the state. The matter is being litigated in Floyd County Circuit Court.
Waterway improvements
In light of the state leaving RGGI at Youngkin’s request, the governor maintains in his latest budget request $100 million for the Community Flood Preparedness Fund, which was funded by RGGI’s revenues and helped pay for flood resiliency projects.
Other water-related amendments include fully funding the state’s cost-share program for farmers to install agricultural best management practices, like fencing cattle outside of streambanks, with about $201 million.
Differences exist around Youngkin’s amendment slating $5 million for a pilot program to pay farmers for achieving actual pollution reduction outcomes, as well as $100 million for wastewater treatment plant projects.The legislature planned to fund the pilot pay-for-outcomes program at $20 million and wastewater treatment plant upgrades at $400 million.
Richmond CSO
The governor’s revised budget includes $50 million for the city of Richmond’s combined sewer overflow system upgrades, a legislatively mandated project that must be completed by 2035. The system treats wastewater and stormwater through the same pipes, which currently discharge waste into the James River during heaving periods of rainfall.
Last year’s budget amendments included $100 million for the upgrades, but it was cut from the final spending plan. Youngkin included $50 million in his December biennium budget proposal, but the legislature cut it again from their final proposal last month.
K-12
To reduce teacher salary gaps, the governor plans to support investing $21.2 billion in K-12 education, giving teachers a 3% salary increase for each of the next two years.
The governor’s administration said the average teacher pay in Virginia is around $68,300 compared to the national average of $68,500 in fiscal 2023, according to the National Education Association.
However, the Virginia Education Association disputed the data provided by the administration.
In a statement, VEA said the problem is that both sources have different ways of calculating teacher salaries. The association said VDOE includes more types of teachers and their pay, such as counselors and librarians, compared to NEA that includes only classroom teachers and substitutes.
Last month, the General Assembly sent the governor a budget that provided a similar measure for teachers and support positions. Lawmakers included language that would require school divisions to provide a local match.
The governor’s amendments included an additional $150 million from the literary fund for the teacher retirement fund and money to reform the Standards of Quality funding formula to determine how much schools are funded.
An additional $320 million in adjustments to K-12 policy initiatives proposed by lawmakers is pending.
Early childhood
The Youngkin administration, which announced plans to address the anticipated shortfall of federal funds for child care, said the budget provides $805 million from the general fund to support Virginia’s Early Childhood programs, a $420 million increase over the biennium in general fund resources.
Last month, the General Assembly budget increased the governor’s proposal by $74 million.
Lawmakers also put in $25 million toward creating a child care center for state employees in Richmond, using space on the campus of Reynolds Community College. Legislators included language to determine how other community college campuses could be retrofitted to provide child care for community college students and the broader public.
Higher education
The governor is supporting an increase of $1 billion for higher education, which includes $33 million in undergraduate and graduate financial aid, and $24 million to help veterans and their families by paying education fees and living expenses.
The investment also includes $154 million to prevent students from paying more in tuition — which is conditional upon colleges and tuitions not raising tuition beyond 3% — $75 million for Pell Grant recipients, and increases to the tuition assistance grant program.
Last month, lawmakers proposed an additional $205.4 million over the biennium to help students to earn a degree. Lawmakers said the investment would prevent increased costs for in-state students and includes $40 million in support for historically Black colleges and universities.
Transportation
The governor committed to investing $133.7 million in additional funding over the biennium to the Washington Metropolitan Area Transit Authority, which operates Metro.
Youngkin’s proposal is less than the $149.5 million proposed by lawmakers.
Regarding toll relief, the governor wants to commit $67 million in one-time funding to expand and extend toll relief for residents of Portsmouth and Norfolk earning less than $50,000 per year.
Lawmakers proposed more, with an additional $101 million over the next two years. Under the General Assembly’s budget, which would combine with the state’s existing Toll Relief program, eligible drivers could get a 100% toll rebate for up to 14 trips per week through the Elizabeth River Tunnels until 2036.
Youngkin also proposed additional funding for Interstate 81.
Skill games
Youngkin seems poised to amend a high-profile bill to legalize slots-like skill machines in Virginia convenience stores, restaurants and truck stops, but he didn’t give specifics when discussing the potential budget ramifications.
The governor indicated his changes to the skill games bill would likely mean less revenue to the state that would come later than what the General Assembly envisioned, a sign he intends to take a less accommodating approach to skill games than the legislature.
Youngkin said he’s working with a bipartisan group of legislators on skill games and understands it’s a “very important objective” to many lawmakers.
“I have major problems with the bill that came over,” the governor said. “So we’ve been working to see if we can address those. We’ll see.”
