Youngkin budget pitches more than $1 billion in new tax cuts
Gov. Glenn Youngkin’s first crack at rewriting Virginia’s budget includes new, major corporate and individual tax cuts that he argues will reduce cost of living and lure new businesses from other states.
Speaking to lawmakers on Thursday, Youngkin pitched tax cuts that would cost the state more than $1 billion in the current budget, rising to more than $1.6 billion annually by 2028. He argued the state could afford the cuts despite recessionary “storm clouds on the horizon,” because the state government was “flush with cash” and his team’s projections showed that trend would continue.
“My fundamental belief is this money is better spent by businesses and the business owners than by government,” Youngkin said. “The reality is that if we don't take advantage of our current financial position to make ourselves more economically competitive, we will only fall further behind these most competitive states.”
Youngkin’s proposed tax cuts include:
- A decrease in the state’s top marginal tax rate — for people making more than $17,000 annually — from 5.75% to 5.5%
- Reducing the business tax rate by 1% — drawing it below Tennessee, Georgia and Florida, according to Youngkin
- Increasing the standard deduction to $9,000 for individuals and $18,000 for married couples filing jointly, building on increases passed last year
It’ll be up to lawmakers, including leaders in Virginia’s Democratic-controlled Senate, to decide whether to greenlight Youngkin’s amendments to the two-year budget he signed earlier this year.
While there did appear to be points of common ground, such as increasing spending on behavioral health care, Sen. Mamie Locke (D-Hampton), chair of the Democratic caucus, said it wasn’t enough.
“Instead of fully funding mental health services, public education institutions, addressing the workforce shortage, and making housing and higher education more affordable, the Governor is proposing a budget that gives major corporations and the top 1% massive tax cuts at the expense of those who need it most,” Locke said in a statement.
Youngkin argued new investments in education, behavioral health care and law enforcement were still possible under his plan.
His proposals include:
- $427.7 million to combat learning loss, including additional reading specialists for 4th and 5th grade, math specialists for kindergarten through 8th grade and $50 million in funding for college preparatory laboratory schools
- A 1% retention bonus for K-12 public school teachers, with an additional $50 million set aside for “high-performing teachers”
- $30 million to support state and local law enforcement efforts to recruit law enforcement officers through bonuses, incentives and outreach
- $674 million to stem pollution flowing into the Chesapeake Bay, including $100 million to Richmond City to address an ongoing sewage overflow problem
- Nearly $150 million to behavioral health programming, including:
- $20 million to fund 30-plus mobile crisis units designed to travel and help people in amid a mental health emergency
- $58 million to increase the number of crisis receiving units, which function as a kind of emergency room for people experiencing mental health crises
“Frankly, the Commonwealth's behavioral health safety net is not equipped to address the demands that are being placed on it today,” Youngkin said.