Legislators are preparing to consider actions taken by Gov. Glenn Youngkin on Wednesday, after the Republican vetoed a record number of bills and suggested hundreds of changes to the state budget.
VPM News’ Jahd Khalil spoke with Youngkin on Thursday, April 11, about how he built his budget proposal and what comes after.
Youngkin pitched the changes to Virginia’s two-year spending bill as a "Common Ground Budget."
After eliminating hundreds of millions of dollars of funding for Democratic priorities, Youngkin had a new starting point for his 242 recommendations: 233 to the upcoming budget document and nine for the “caboose” budget, which accounts for state spending retrospectively.
Youngkin says he is seeking no changes to the tax code, and restructured or used state funds differently to fund General Assembly priorities.
Of the largest differences in Youngkin’s latest proposal are cuts to education, particularly in direct aid to K-12 education and higher education spending. Youngkin also reintroduced funding for lab schools, a type of charter school, and for economic development sites that Democrats removed.
The Legislature has 10 days once it reconvenes to consider Youngkin’s recommended changes and vetoes. If the governor vetoes the budget the General Assembly sends him after that session, they will have to return to a special session and pass a budget before funding runs out at the end of June.
Editor's note: This interview has been edited for length and clarity. Click here for the full, lightly edited transcript.
Jahd Khalil: So governor, you call this the “Common Ground Budget.” My understanding of it is that you looked at what the Democrats in the General Assembly sent you, took out the tax hikes that they asked for, took out the funding for bills that you vetoed — like the higher minimum wage — then added some funding that you found or restructured.
Now you're proposing spending relatively less on what the Democrats were proposing to you, plus a little bit of what you wanted. How accurate would you say that summation is?
Gov. Glenn Youngkin: I think that's a very good summation, if I could, just to just to add two thoughts to it. And to make sure, numbers wise, we're framed.
So first of all, as I have mentioned on Monday, we don't need to raise taxes. The Virginia economy is doing well. Record job growth and the record labor force have driven record [tax] receipts for the Commonwealth. They've grown 40% over the last four years with a substantial uptick over the last three. And that provides us adequate, if not plenty of resources, to fund a $64 billion budget.
I have been advocating for tax relief and tax reductions. We had $5 billion of tax relief and tax reductions in the last biennium. And I believe we still have room. With that said, when the General Assembly sent over a very large tax increase, I felt that there was a first step to find common ground that have no tax policy changes, and no tax increases and I will at least put on the sideline my advocacy for tax decreases. So that's our first big step.
That $64 billion of funding accomplishes the vast array of objectives that were sent over by the General Assembly; I have to say that I took I took a real step back on a number of my objectives. From my introduced budget, there was $850 million of prior priority projects and investment that were taken out in the conference reports by the General Assembly. I only put $230 million of that back, which was predominantly lab schools and site development, and some IT projects that need to get done.
When you take the billion dollars of tax cuts that I had in my introduced budget, plus that over $600 million of spending capacity, it gave me an incredible amount of resources to go work towards the General Assembly priorities. And that's exactly what we did. So, I think your bridging is correct.
The reality is that when you really take out — as you as you did — the movements that we made in capital, which were really to provide some bonding to appropriately scheduled projects that hadn't been planned for, and to reduce, but not eliminate the wastewater overflow projects. Then you couple with the opportunity for us to utilize the historically utilized literary fund to fund teacher retirement. That's the purpose route for it, why it was set up.
And we had $98 million on deposit with the [Northern Virginia Transportation Commission] for the amount of funding and so we should use that first. It's the state's money, we should use it.
We really ended up with an incredibly small gap between the General Assembly's conference report and where we ended up with The Common Ground Budget. I mean, really, it ended up being about $400 million out of a $64 billion under budget, and one of the areas that I feel like we've again, can find common ground is our priority spending in education.
This common ground budget has $21.3 billion in in K-12. Funding a $1.2 billion increase from the last biennium — which by the way was a $4 billion in the increase from the budget cycle before — really does meet our objectives, our shared objectives. Teacher pay: now teachers are not just at the national average, but projected to move through the national average with these 3% increases each year—
Sorry, Governor.
Yep?
Could I just ask you a bit about that? There's a few different ways that you compare the budget: to either the last biennium, or the budget that the Democrats sent you, or even sort of before that [although] with COVID, it gets a little sort of complicated in terms of what you're comparing against.
But I wanted to ask you a bit about the direct aid for public education — the teacher raises are in there as I understand it.
I was looking at the numbers from the Department of Planning and Budget. [In those numbers] the direct aid, compared to the conference report [that the legislature sent you] was something like $485 million less for direct aid. Can you talk about why that number meets our needs and how you got to that?
That's exactly where I was getting ready to go right then.
Out of that 480 million, to be clear, [$170 million] of it is associated with the elimination of the tax increases. When the sales tax expansion and tax increases go away, $169 million associated with that is eliminated. That's just a mechanical step, which really leaves just over $300 million in the K-12 line that is an adjustment from the conference report.
And to be clear the three notable areas there are, first, at-risk students. What we felt strongly in both at-risk [students] — and I'll talk about English language learners as well — is that there is a a very constructive, bipartisan joint subcommittee on the funding formula in progress right now. They're going to work during the summer. They have reports due next fall.
We felt — and I've heard from a number of folks on the joint subcommittee — that we should wait for that work before we start adjusting structurally the program.
The adjustments that we put through substantially increased funding, both for at-risk [students] and English language learners, but do it on the historic ratios, and really are underpinned by waiting to see the work from this bipartisan joint subcommittee that has been tasked and was tasked in the last budget cycle to do this most important work of really restructuring the funding formula for our schools, and taking it from a ratio-driven structure to a student-centric structure.
We are collectively supportive of this. Therefore the increases in spending are targeted towards these most important areas like at-risk [students] and like English language learners. They're just done on the old funding formulas, and not on the new ones.
I will say also, just as a side note, the revised funding formula that had been included in the budget language actually resulted in a number of school districts losing money — budget cycle over budget cycle — by sticking with the old funding formula, but increasing the amounts, which is really increasing the ratio of teachers to students. In both contexts, we're able to make sure that all of the school districts benefit.
The last component that make[s] up the biggest part of this $300 million is child care. Our introduced budget had a doubling of child care support — actually more than a doubling. That was a result, again, of a bipartisan joint subcommittee that had been working on how we’re going to address the reality that the federal government was pulling the rug out from so many Virginians.
It all starts with step one, which is [to] make sure that no Virginian loses [the] child care support that they use to maintain their jobs and their lives. And I think there was a general agreement that we were not only going to do that, [but] we [also] listened to the General Assembly's thoughts around the deductible levels, and maintained in the common ground budget, a really low-deductible, well below the national guidelines. And [we added] 500 slots, which was part of the requests that came from the General Assembly. The net is, I think we found common ground on child care.
The net of this is there are massive increases in K-12 support, and I look forward to the good work coming out of this joint subcommittee of our General Assembly.
Governor, I've got just two more questions. One of the issues that seems to matter you the most is Virginia's participation in the Regional Greenhouse Gas Initiative, which is a carbon market that looks to reduce emissions. And you wrote a budget amendment that struck from the budget that Democratic lawmakers sent you [a requirement for] us to rejoin RGGI.
Some of the people that I've talked to say that might not be constitutional, but the law has kind of a gray area there. Can you describe how you got to the point, that that’s a sound way to propose that sort of specific budget change?
So Jahd, can I just begin with the fact that the way the Regional Greenhouse Gas Initiative, as constructed in Virginia, doesn't work to give people incentives to reduce greenhouse gas emissions? It's just a tax.
That's exactly what Dominion described it as, and the mechanics of it are really important.
All they do is they buy credits, and then they pass those credits onto consumers with consumers having no say, and therefore it doesn't influence anything other than increased electricity bills.
I have felt that in fact, our effort for resiliency, and more affordable, more accessible, and more reliable — and increasingly clean — power is something that we should do on a transparent basis. So I have supported substantial increases in our resiliency funding. I also believe that we can march towards again, increasingly reliable, affordable and clean power in a far more transparent way, as opposed to suggesting something that RGGI is that it's not, it is just simply an electricity bill tax that consumers have no say over.
With that said, we firmly believe that the regulatory framework that we have gone through provides absolute constitutionally supported approach for Virginia to not be part of RGGI. Meanwhile, we continue to include record investments in conservation and environmentally-focused investment from this administration.
I will go on the record: I have worked harder, I believe, than anyone in making sure that Virginia moves forward to meet its Chesapeake Bay 2025 goals, to make sure that we have clean water and that we have a power policy that — yes — embraces moving toward increasingly clean power, but does it in a way that's responsible so that we can make sure the lights come on.
And there's been major concerns that we in fact, have left a huge power supply gap in Virginia — and it is giant — that we must meet. That means we need an all-of-the-above approach. And that's why I've been very focused on Virginia winning the small modular reactor race. I think we can win it and it provides a zero-emission, baseload power capability that I think will truly enable us again to have increasingly reliable, affordable and clean power.
I guess what my question was more getting at was, if you're making a budget amendment in which you're just removing one of the conditions as opposed to an entire item, [that seems to be] extracting something out of [the budget item. That] can look like a veto to somebody else.
On the other hand, you have the Legislature kind of putting policy into the budget and sending it to you. This what I'm getting at: the governor's prerogative to make amendments versus the Legislature's powers. Can you talk a bit about that and how you got to the point that RGGI should be eliminated as a whole condition being taken out?
Well, it's fully within my constitutional authority, clearly, in order to amend — which is what I've done here — but also to veto this item.
And, again, I did not send any line-item vetoes in our Common Ground Budget. Why? Because I wanted to clearly communicate to our General Assembly: I want to work together.
This, of course, could be subject to a line-item veto. I went with an amendment because I do believe that this is a place we can find common ground: no tax increases.
Let's be clear, the RGGI amendment that was put into the conference report increases Virginians’ utility bills by $600 million. It is a tax. When you couple that with the rest of the sales tax expansion, there's a $2.6 billion tax increase.
We have plenty of money in the system, we can fund a $64 billion budget that that meets the vast array of the General Assembly's priorities without raising taxes. This is a great opportunity for us to come together on common ground.
I remember when we spoke after the State of the Commonwealth, you said a tax increase isn't something that interests you. You're talking about RGGI as a tax increase.
What are the circumstances that would cause you to veto the budget and therefore call a special session? Is a tax increase in the budget that the General Assembly will send you next week something that would force you to veto the budget?
I know everybody's focused on what’s next. What I am very hopeful as to what is next is a collaborative process with leadership in the House and the Senate.
I think we can land this. I think this is what Virginians expect from us. We can continue to be on time in a regular way with a clean budget, and that's the opportunity in front of us. And that's the one that I'm running toward, in a very directed way. Let's find common ground.
Let's, in fact, not have any changes in tax policy. And then let's use the enormous resources that Virginians enable us to have by paying taxes to put together a $64 billion budget: a record level of priority spending in education and in health and human resources and law enforcement and conserving God's gifts to this planet.
We can do all of this without tax increases. And that's what I'm really hopeful, Jahd, that we can do together over the course of the next few days, and particularly when folks come back next Wednesday.
Thank you so much, Governor.
I always appreciate you, and thanks for your commitment to the Commonwealth.
