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RICHMOND — The Virginia General Assembly passed a budget compromise Wednesday that both Republican and Democratic lawmakers praised — though Gov. Glenn Youngkin (R) got only a few of the recurring tax cuts he had been seeking.
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Youngkin last month summoned lawmakers to Richmond after budget negotiators from the Senate and House of Delegates reached a tentative agreement on changes to this year’s spending plan. Since adjourning the regular General Assembly session Feb. 25 without a budget deal, lawmakers had spent the past six months at loggerheads over Youngkin’s push for $1 billion in tax cuts.
His proposed cuts included reducing the corporate tax rate, trimming the top marginal rate for individuals and increasing the standard deduction, all on top of $4 billion in tax cuts that the General Assembly passed last year.
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Democrats balked at the recurring cuts — which would decrease state funds into the future — and instead proposed greater increases for spending priorities such as public education, teacher and state employee pay raises, and mental health services.
Last month, House Republican negotiators partially conceded to Senate Democrats and dropped most of the recurring tax cuts, settling instead for one-time taxpayer rebates of $200 for individuals and $400 for couples. The deal also would increase the standard deduction to $8,500 from $8,000 for single filers and to $17,000 from $16,000 for married couples filing jointly. That change will remain in effect as long as state revenue hits certain targets. If it falls short, the deduction reverts to current levels.
Also included: restoration of the back-to-school sales tax holiday that lawmakers and the governor all forgot to reenact this year, as well as higher spending on education and mental health.
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The House voted 86-4 in favor of the package of budget amendments, and the Senate approved it 38-0.
“While the process took longer than needed, more than $1 billion in tax relief is on the way to Virginia veterans, working families and businesses,” Youngkin said in a statement shortly after the votes. “Additionally, this collaborative effort ensured the funding of our shared priorities: investing in students and teachers, supporting our law enforcement community and transforming the way behavioral health care is delivered in the Commonwealth. There’s more work to be done, but I applaud the General Assembly for their work today.”
“I’m pleased,” Del. Barry D. Knight (R-Virginia Beach), chairman of the House Appropriations Committee, said in brief floor remarks before the vote. “This budget is a bipartisan, bicameral compromise.”
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Knight praised the package for containing $1.1 billion in tax relief — mostly in the form of one-time payments to taxpayers — and for boosting funding for public education by more than 7 percent over the amount approved in the bare-bones “skinny budget” passed in February to keep agencies on track.
“We believe this budget package provides much-needed relief to help our low- and middle-income citizens,” Knight said in his remarks.
Minority Leader Don L. Scott Jr. (D-Portsmouth) also praised the budget deal in comments before the vote but took a more combative tone.
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“Today, hard-working Virginians won,” he said, adding that Democrats had secured a deal that “puts Virginia families over corporations” and is more affordable than the “tax breaks MAGA extremists wanted to hand to big corporations.”
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He went on to praise the budget for safeguarding abortion services for poor people — something he said Republicans had tried to strip out in an earlier version — as well as funding for gun violence prevention.
“Every single Republican voted to give tax breaks to corporations, but we’ve come to our senses,” he said.
Senate Majority Leader Richard L. Saslaw (D-Fairfax) said the compromise shows that Youngkin was out on a limb for proposing a host of tax cuts, including one on corporate profits that the Democrat called “preposterous.”
“He apparently thinks he can run the government for free,” Saslaw said. “Unfortunately, you can’t.”
Sen. Janet D. Howell (D-Fairfax), co-chair of the Senate Finance and Appropriations Committee, called the spending plan “the best budget I’ve seen in my 32 years” in the Senate.
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“We have filled lots of gaps that had been festering for decades,” she said. “We’ve known for decades that our mental health system needed a lot of additional funding, and we’re giving it to it this time. And education at all levels — from pre-K all the way through higher ed — is getting an influx of money that will help them meet needs.”
All 140 seats in the legislature are on the Nov. 7 ballot, with control of the General Assembly at stake. Republicans controlled the House by 52-48 in this year’s session, while Democrats controlled the Senate 22-18. Flipping only a few seats in either chamber could give Republicans total power to enact Youngkin’s conservative agenda — or keep Democrats in position to block it.
With Youngkin maintaining a high national profile by flirting with a presidential run that enables him to raise record-breaking amounts of cash, political pressure has worked against Republicans and Democrats compromising on any kind of budget deal.
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The impasse hasn’t impacted state services. Virginia is operating on a two-year spending plan adopted in 2022, and the second-year budget went into effect July 1. But some $3.6 billion in excess state funds had been left in limbo. School districts around the state have been particularly affected, leaving them uncertain about the scope of teacher pay raises and other funding increases.
The budget deal hammered out by negotiators includes an increase of more than $640 million in direct aid to K-12 schools and about $55 million for a two-percent pay raise for teachers.
It also boosts spending on mental health services by nearly $155 million, including $10 million for mobile crisis teams and $7.5 million for school-based pilot programs.
The budget includes $15 million for “Operation Ceasefire,” a program that Speaker Todd Gilbert (R-Shenandoah) has pursued for years as a means of curbing violent crime.
Youngkin has seven days to make any amendments, which the House and Senate would return to consider.
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