General Assembly adjourns after passing ‘stopgap’ budget, no final deal

Virginia Capitol

By Madison Hirneisen

(The Center Square) – The politically-divided Virginia General Assembly agreed on a “stopgap” budget bill before lawmakers adjourned the legislative session Saturday, with lawmakers indicating work remains to reach a final deal on amendments to the state’s two-year state spending plan.

Without an agreement reached on key aspects of proposed amendments to the state’s budget – including $1 billion in tax cuts proposed by Gov. Glenn Youngkin – the legislature agreed to pass what House Appropriations Committee Chair Del. Barry Knight described as a “stopgap” budget with just a few items.

The spending bill lawmakers passed Saturday is four pages long and deals with just a few items, including technical amendments addressing the state’s rainy day fund and capital projects.

One of the items included in the “skinny” budget is funding to address a calculation error that overstated the amount of state aid school districts could expect to receive by roughly $201 million. The spending plan passed by the General Assembly Saturday includes $132.7 million in fiscal year 2023, and $125.8 million in fiscal year 2024 to address the calculation error.

Knight said meetings on the budget amendments will continue in the coming weeks. He indicated once some kind of an agreement on the budget amendments is reached, the governor will call a special session.

“We’re very far apart on the money,” Knight told reporters after the House adjourned Saturday, noting a compromise on proposed tax cuts and spending has not yet been reached.

Differing proposed amendments to the two-year budget signed last summer were passed in the House and Senate earlier this month, spurring discussion behind closed doors among a committee of lawmakers tasked with hammering out a compromise.

The main difference between the two proposals comes down to the inclusion of $1 billion in tax cuts proposed by Gov. Glenn Youngkin. The governor’s proposed budget amendments sought to cut the corporate tax rate from 6% to 5%, lower the top income tax rate from 5.75% to 5.5% and raise the standard deduction.

Several bills that carried Youngkin’s proposals to cut the corporate tax rate and top individual income tax rate hit a roadblock in the Senate, where Democratic lawmakers pushed back on cutting taxes for corporations and the state’s top earners. Under Virginia’s tax bracket system, the highest bracket starts at $17,000.

The House’s proposed budget included Youngkin’s tax cuts, while the Senate’s proposed budget included none of these proposed tax cuts. Instead, the Senate’s budget included millions in additional funding for education and school staff.

Without a final agreement reached, how lawmakers intend to address an over $3 billion budget surplus remains underdetermined as lawmakers head back to their districts.

“We ran out of time,” Sen. Janet Howell, D-Fairfax, co-chair of the Senate Finance and Appropriations Committee, said to lawmakers Saturday, according to the Washington Post.

In a press gaggle with reporters after Saturday’s session, Youngkin said he was “disappointed” an agreement was not reached on amendments to the state spending plan, adding he told the chairs of the House and Senate money committees that he would call a special session when they are ready.

“Virginians deserve an opportunity to see our legislature and our government work for them, and we have $3.6 billion of surplus,” Youngkin said. “There is plenty of money for tax cuts and to invest in these most important priorities like education, behavioral health and law enforcement. We can get this done, there is plenty of money in the system.”