Republican Glenn Youngkin pitched a series of tax cuts on Monday that his campaign says will save the average family upwards of $1,400 next year. His Democratic rival, former Gov. Terry McAuliffe, has proposed a $2 billion annual investment in education if voters elect him in November.
Both plans hinge at least partly on a $2.6 billion budget surplus that state officials say is spoken for. Secretary of Finance Joe Flores delivered the news to lawmakers on the legislature’s money committees when they met on Aug. 18.
“What I'm here to disappoint you about is that all of that has been allocated,” Flores said. “All of it -- the $2.6 billion. And that's not just me, that's the Constitution."
Roughly $1.1 billion of the money will go into state reserves, as required by Virginia’s Constitution. Other funds are required to be set aside for water quality improvements and transportation.
Still, forecasts in December could show stronger-than-expected revenues, giving lawmakers -- and the next governor -- more latitude.
The surplus figures prominently in the tax plan Youngkin laid out Monday.
The former businessman called for doubling the standard deduction for Virginia income taxpayers, resulting in a one-time rebate of $600 for joint filers and $300 for individuals. The plan would cost around $1 billion, according to a campaign aide. In a background call with reporters, the aide said that the surplus would cover the costs of the rebate. The campaign did not immediately respond to follow-up questions.
Two other elements of Youngkin’s tax plan -- eliminating a 2.5% grocery tax and freezing a gas tax increase for 12 months -- would be paid for using future revenue growth, the aide said.
Youngkin also called for requiring referendums before local governments can increase property taxes. Those taxes have grown especially sharply in hot housing markets like Richmond, where assessments and the associated taxes have hit new highs.
“We can't let people continue to suffer from government-inflating costs such that people might have to leave their homes,” Youngkin said.
A Youngkin campaign aide said that the proposal would not cause any cuts to local education, which is heavily reliant on property taxes. He pointed to a recent surge in local funding from Congress -- some of which has been opposed by Republicans -- that could “create a bridge” and avoid any cuts.
McAuliffe has proposed annual $2 billion investments to increase teacher pay above the national average, fund universal pre-K, and provide all students access to broadband. The campaign previously told the Virginia Scope that the plan would be funded with $300 million per year from marijuana legalization, $360 million from casinos, as well as funds from the $2.6 billion dollar surplus.
In a statement on Monday, Renzo Olivari, a spokesperson for McAuliffe, said Youngkin’s plan would result in “drastic cuts to public education” and said McAuliffe’s education plans still held.
McAuliffe “will fund his plan by strategically investing hundreds of millions in revenue from the legalization of marijuana and casinos, as well as available funds from the ongoing surplus Virginia is likely to continue to see from our economy rebounding faster than expected," Olivari said.
Governors propose state budgets, but it’s up to the General Assembly to pass them. With the House of Delegates up for grabs this November, both candidates may have to be open to compromise on their plans. Either way, Democrats will maintain a narrow 21-19 hold on the state Senate at least through elections in 2023.
