The General Assembly voted today to accept the budget deal reached by Governor Youngkin and conferees. While the governor’s decision to block the bipartisan budget sent to his desk could have led to a government shutdown, Democrats both averted the crisis and successfully fought to ensure the most pernicious provisions of the governor’s original budget did not end up in the final deal.
Here are five key takeaways on the budget that was passed today:
1. No State Sales Tax Rate Increase
The budget that Governor Youngkin proposed in December would have raised the state sales tax rate from 4.3% to 5.1%. Democrats opposed this regressive tax, which would have hit working families harder than the ultra-wealthy. Democrats successfully fought to ensure there would be no increase in the state sales tax rate in the budget.
2. No Tax Giveaways for the Ultra-Wealthy
Governor Youngkin’s December budget included tax giveaways for the ultra-wealthy. His total tax package would have resulted in a nearly $10,000 handout for the wealthiest 1 percent, while raising overall taxes on hardworking people making under $58,000 per year. Democrats successfully fought to defeat this tax scheme.
3. Rejects Youngkin’s $300 Million Cut to Public Schools
Gov. Youngkin’s December budget would have slashed funding for public K-12 schools by nearly $300 million compared to current levels. The budget passed today preserves that funding and includes the state’s portion of a 3% pay increase for school employees each year.
4. Gives Up Billions in RGGI Funds, Putting Further Strain on Future Budgets
By failing to include Virginia’s participation in the Regional Greenhouse Gas Initiative in the state budget, the General Assembly is giving up billions of dollars of funding for resilience projects in coming years. The loss of that money will put further strain on the General Fund, jeopardizing resources for other priorities, including public schools.
5. Does Not Close the Big Tech Loophole, as Gov. Youngkin Had Proposed
The governor flip-flopped on his initial proposal to close what he called “the Big Tech loophole” in December. Youngkin evidently did not believe corporations should have to pay their fair share. The final deal does not close the loophole, resulting in $169 million less in direct aid to schools compared to the bipartisan budget passed in March. Rural schools and schools serving families with lower incomes would have benefited the most from that funding had it been included.
Freedom Virginia Executive Director Rhena Hicks issued the following statement:
“This budget makes significant investments in K-12 public schools, health care and other critical priorities, due to Democratic legislators’ work in fighting to include these investments. Compared to the Governor’s proposed budget in December, this budget includes more funding for public schools, teacher pay and critical health programs. Democrats prevented the governor’s proposed cuts to education, and defeated his tax scheme that would have raised taxes on hardworking people while giving handouts to the ultra-wealthy.
“The fact remains that Governor Youngkin blocked a bipartisan budget because he did not want corporations to pay their fair share to fund our schools, and now our rural schools in particular are missing out on that investment. Governor Youngkin also blocked progress on affordability by vetoing a Paid Family and Medical Leave program and a Prescription Drug Affordability Board. And he stood with big corporations and special interests in refusing to continue the Regional Greenhouse Gas Initiative, which will further impact Virginia’s fiscal health. Virginia’s tax code remains unfair and our schools remain underfunded. There is a lot of work ahead to ensure millionaires pay their fair share and hardworking families can keep more of what they earn.”
