CHESTER, Va. — Gov. Glenn Youngkin (R) strode into Brock’s Bar-B-Que in this Richmond suburb Thursday to find an audience hungry for the political red meat he was there to deliver.
“Your government can go to work for you by getting taxes down,” Youngkin told an enthusiastic crowd of about 100 local residents and businesspeople assembled as part of a “Richmond on the Road” tour to tout his legislative agenda.
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Fresh off his big win to make school masks optional, Youngkin is pivoting to tax cuts as his next priority. He took the message to Leesburg on Thursday morning and headed to Chesapeake in the afternoon.
Youngkin signs bill requiring Virginia public schools to make masks optional by March 1
“Yesterday we stood up for parents,” Youngkin told the crowd in Chester. “Today we’re cutting taxes.”
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The new governor, a former private equity executive who had never held elective office, is pressing a campaign-style approach to turn up the heat on lawmakers. It comes at a crucial time in this year’s General Assembly session, with both the Republican-controlled House of Delegates and the Democrat-controlled Senate slated to unveil their budget proposals next week.
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Those competing packages will make the battle lines clear, but there are already signals about where Youngkin might expect victories or defeats on tax cuts.
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Both the House and Senate have advanced measures that would support Youngkin’s call for exempting the first $40,000 of pension income for military retirees. Both also support one-time rebates for each taxpayer. Youngkin has called for $300 for individuals and $600 for married couples filing jointly.
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Former governor Ralph Northam (D) submitted an outgoing budget that included another Youngkin talking point — cutting the state tax on groceries, which Democrats have advocated for in the past. But Northam proposed only eliminating the 1.5 percent portion levied by the state; he left the 1 percent local portion untouched. Youngkin wants to get rid of both.
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The Senate has favored Northam’s approach, aiming to protect the local funding stream. The Senate has also put the brakes on Youngkin’s plans to put a one-year freeze on an increase in the gasoline tax and to double the state’s standard deduction on income taxes.
Budget negotiators will have the rest of the legislative session to hash all that out; the General Assembly adjourns March 12.
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The other side of the tax cut equation, of course, is spending. Youngkin is also calling for bigger investments in education, law enforcement, behavioral health services and more, but tax cuts will reduce the amount of revenue the state has available to fund those and other services for years to come.
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In his pitch to voters on Thursday, Youngkin said the state is at a “unique moment” because of hefty budgetary surpluses. After an unexpectedly robust recovery from the economic shutdown of the pandemic, and turbocharged by federal aid, Virginia finished the last fiscal year with a surplus of $2.6 billion and expects windfalls of about $3.5 billion for each of the next two years.
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“It’s your money. It’s there because we’re overtaxing Virginians,” Youngkin said. “This is our chance to cut taxes and increase some spending in most important areas. We can do both right now.”
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But lawmakers in the General Assembly have warned that some of the lost revenue streams could damage state priorities, particularly if there is an economic downturn. Cutting gas and grocery taxes will eliminate hundreds of millions of dollars earmarked for transportation, for instance, unless the money can be found elsewhere in the budget.
“We are still several billion with a ‘b’ dollars short of fully funding transportation just in Northern Virginia, let alone the rest of the commonwealth right now,” Del. Danica A. Roem (D-Prince William) warned during floor debate earlier this week.
In brief comments to reporters, Youngkin said Thursday that he’s confident the state’s economy will be strong enough to absorb the lost tax revenue.
“When we get this economy growing and we bring taxes down, we in fact should continue to see, yes, a very healthy state government [from a] fiscal standpoint,” Youngkin said. “But we’ll be doing it in a sustainable way. But when we have too much taxation it burdens our economy.”