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Gov. Glenn Youngkin signs $188B, 2-year budget in quick special session

Gov. Youngkin shakes hands with Lucas
Shaban Athuman
VPM News
Gov. Glenn Youngkin shakes hands with state Sen. Louise Lucas (D–Portsmouth) after signing the budget following a special session on Monday, May 13, 2024 at the Virginia State Capitol in Richmond.

Politically, it puts an end to a monthslong debate that observers called markedly tense.

Virginia lawmakers passed a $188 billion budget Monday, using unexpected tax money to fund spending increases General Assembly Democrats proposed in April, instead of a new digital sales tax that they had been at loggerheads over with Republican Gov. Glenn Youngkin.

When compared to the last two-year budget, the budget increases education funding by $2.5 billion; has a 3% raise for state employees, teachers, and support staff; and increases funding for child care by $500 million, according to a Senate summary.

The spending bill hews closely to what Democrats passed in April after largely pushing Youngkin’s December proposal aside. The updated budget meets three of his notable policy goals: No new taxes, no requirements to rejoin the Regional Greenhouse Gas Initiative and funding for charter schools.

“I think it's a big day for a lot of reasons,” said Youngkin as he signed the budget Monday afternoon. “But one of the most important is to demonstrate to Virginians that their elected officials, who sometimes find themselves very far apart on policy, can come together and deliver.”

Planners made almost 100 changes to the fiscal 2025 and fiscal 2026 budget, about half of which were made to accommodate for the more than 200 amendments Youngkin made. Many others were technical changes. This budget will run from July 1, 2024, through June 30, 2026.

Striking the digital sales tax and the requirement to rejoin RGGI were the two largest changes to the finalized spending plan.

While the digital sales tax was not in this budget, it does task a joint subcommittee to study the implementation of one, as well as changing Virginia’s tax progressivity and structure. That provides another avenue for tax changes beyond a legislative study that explored making the tax structure more progressive.

Environmental and progressive groups were dismayed that RGGI was not included.

“The General Assembly is giving up billions of dollars of funding for resilience projects in coming years,” said Freedom Virginia in a press release. “The loss of that money will put further strain on the General Fund, jeopardizing resources for other priorities, including public schools.”

In health and human resources, the budget fully funds insurance forecasts for low-income Virginians and children, adds 3,440 Medicaid developmental disability waiver slots, and provides millions in funding for community health workers in local health departments.

In Richmond, the budget provides $50 million for state-mandated costly upgrades to the sewer system, instructs Virginia Commonwealth University Health System to pursue ending payments to the city related to a canceled development, and sets up a commission to investigate the roles higher education institutions had in displacing Black Virginians.

Del. Torian shakes hands with Del. Austin
Shaban Athuman
VPM News
Chairman Luke Torian (D–Prince William) shakes hands with Del. Terry Austin (R–Botetourt) during a House Appropriations committee budget meeting on Monday, May 13, 2024 at the Virginia State Capitol in Richmond.

Politically, the passage puts an end to a budget debate that observers said was markedly tense, especially around RGGI and the sales tax.

Tax collections that budget planners had underestimated facilitated the resolution, providing a path away from both a potential political crisis and a dent to the state’s financial standing.

While tax collection numbers for April won’t be released until later this week, budget planners adjusted their forecast by $525 million in fiscal 2024. They had originally assumed general fund revenues would contract by 0.6%, while year-to-date growth through April was 5.0%.

That, in combination with accounting for funds that would have funded programs Youngkin vetoed and some changes in borrowing, led to finding enough money to fund the Democrats’ spending goals without a tax hike.

“You saw colleagues who have worked together to put the interests of the commonwealth before party,”Del. Luke Torian (D–Prince William) told reporters.

Torian, who chairs the House Appropriations committee, spoke alongside Del. Terry Austin (R–Botetourt), its top Republican. Austin said there was “mutual respect” through the process.

The budgets passed with overwhelming support by votes of 94–6 in the House of Delegates and 39–1 in the Virginia Senate.

“While the budget isn’t what a Republican House of Delegates would have produced, the document signed by the governor today is a significant improvement over the budget sent to him at the end of the regular session,” said House Minority Leader Todd Gilbert (R–Shenandoah), who voted for the budget. “Once again, Virginia’s leaders have demonstrated that Richmond is not Washington.”

Monday’s special budget session also keeps up elected officials’ track record of passing spending plans after the conclusion of the regular legislative session. Amendments to last year’s “skinny” fiscal 2024 budget passed in September — months after the fiscal year had started.

Lawmakers’ work may further continue this summer: The resolution that sets the parameters for this special session allows for work on bills with a revenue impact, which would include legislation on “skill games,” electronic devices that resemble slot machines.

Key dates in FY2025, FY2026 budget debate

December 2023: Gov. Glenn Youngkin proposes a budget that cuts income taxes and raises sales taxes, including on digital goods that have been exempt from Virginia’s sales and use tax.

February 2024: Virginia’s Democrat-led House and Senate pass different competing budgets, balking at income tax increase. The Senate proposes expanding the tax to business-to-business transactions.

March 2024: Democrats on the legislative committees for resolving differences between the two chambers send Youngkin a joint budget.

March 9: The General Assembly regular session adjourns, and soon after Youngkin and legislative Democrats go on parallel budget tours, increasing political tension and fears the impasse would lead to brinksmanship.

April 8: Youngkin issues over 200 budget amendments.

April 17: Youngkin and the Legislature agree to extend negotiations past tax collection deadlines to provide more room for compromise on spending and taxes.

May 9: Del. Luke Torian announces a finalized spending plan has been reached ahead of the special session.

May 11: The compromise budget is released.

May 13: The Virginia General Assembly reconvenes for a special budget session and passes the finalized $188 billion, two-year budget. Youngkin signs the plan.

Jahd Khalil covers Virginia state politics for VPM News.
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