(The Center Square) — After negotiating almost two months past the start of the fiscal year, the House and Senate budget committees have finally reached a budget deal.
The deal includes compromises in the form of tax rebates and investments in education that were part of the reason for the holdup.
“Virginians welcome the news that the conferees have come to an agreement on a framework that builds on the governor’s work to deliver historic investments in education and mental health while providing significant tax relief which will reduce the cost of living in the Commonwealth,” Macaulay Porter, spokeswoman for the governor told reporters.
Budget negotiations broke down on June 27, leaving Virginia without an approved state budget at the start of the fiscal year for the first time in over 20 years. Because the commonwealth operates on a two-year budget, this didn’t lead to a government shutdown – but it does leave billions of public dollars on hold and cause hang-ups in policy implementation, among other things.
Youngkin had wanted to include another $900 million in tax cuts in addition to the $4 billion Senate Democrats had agreed to last year. He also wanted to reduce Virginia’s corporate tax rate from 6% to 5%, make permanent changes to Virginia’s tax brackets and tax structure, and reduce taxes on veterans’ pensions.
In July, the governor announced a $5 billion budget surplus from fiscal year 2023, arguing that there was enough state funding and sufficient investment in government services to provide for these changes.
Democrats disagreed, especially after a report released on July 10 by the Joint Legislative Audit and Review Commission suggested that Virginia had been underfunding education for years.
House Republicans had to write out the changes to the corporate tax rate and agree to one-time tax rebates of $200 for individuals and $400 for joint-filers and milder increases to the standard deduction (up $500 and $1,000 from 2022 – $8,500 for single-filers and $17,000 for joint-filers).
The budget also prioritizes state spending on education at all levels and investments in natural resources and mental health.
“In an era when partisanship often prevails, the negotiations were cordial and respectful,” legislators said in a statement.