The Washington PostDemocracy Dies in Darkness

House, Senate far apart as Virginia lawmakers pass budget plans

Del. Barry D. Knight (R-Virginia Beach), chairman of the House Appropriations Committee, speaks in the Virginia House of Delegates in 2022. (Steve Helber/AP)
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An earlier version of this article incorrectly reported the amount of money that Gov. Glenn Youngkin (R) and the House of Delegates set aside in their budget plans to study ways to attract the Washington Commanders to Virginia. The amount is $500,000, not $500 million. This article has been corrected.

RICHMOND — This year’s fight over the Virginia state budget took shape Thursday as a stark choice: $1 billion in tax cuts at a time when residents are coping with a tough economy, or the same amount in spending for underfunded programs, especially state schools.

Republicans who control the House of Delegates passed a budget package that boosts spending in some areas while giving Gov. Glenn Youngkin (R) the tax cuts he requested, on top of the $4 billion in tax cuts approved last year. Democrats who control the Senate passed a plan that features a huge boost in funding for schools and social programs — and none of the new tax cuts.

Negotiators will now start looking for middle ground.

“We’ll work it out,” said Del. Barry D. Knight (R-Virginia Beach), who will take the lead in dealing with his Senate counterparts as chairman of the House Appropriations Committee. “Oh, sure, we might, you know, push against each other and see what we can do and we can’t do. But I guarantee you, neither side will get everything they want.”

It might be a tough slog. Sen. Janet D. Howell (D-Fairfax), co-chair of the Senate Finance Committee, put more emphasis Thursday on the differences between the two plans.

Youngkin proposes $1 billion in tax cuts, higher spending in budget plan

The Senate version “has more funding for public education and higher education, even preschool, than any budget in history and we are doing much, much more in the human services area,” she said. “We have a lot more money to spend on the Senate side for priorities because we did not do the tax cuts that the governor proposed.”

Republicans lauded the House spending plan — which closely mirrors Youngkin’s proposals — for taking advantage of hefty surpluses in state coffers to both return money to taxpayers and make investments in areas like economic development, mental health services and bonuses for teachers.

“The House budget positions Virginia to be economically competitive through lower taxes and business readiness,” House Speaker Todd Gilbert (R-Shenandoah) said in a news release, adding that it “sets Virginia on a course for decades of multifaceted success.”

Democrats slammed the Republican budget for proposing to cut the corporate tax rate. “It’s nothing more than a gift for corporations and their high-ranking executives,” House Minority Leader Don L. Scott Jr. (D-Portsmouth) said in a floor speech.

The House passed its package of amendments to the two-year state budget, which went into effect last year, on a vote of 63-36; all the no votes were Democrats, though 12 Democrats joined Republicans to support it.

Until recent years, Virginia lawmakers usually cast votes in favor of the state budget even if they disagreed with parts of it, reasoning that the overall package was for the common good. That practice is weakening in today’s partisan climate.

The Senate budget passed that chamber in a 32-8 vote; all the no votes were Republicans, with 10 Republicans joining Democrats in support.

“Lot of good things in the budget because we have a huge surplus. The reason we have the huge surplus is because our tax burden on our citizens is too high,” said Sen. Mark J. Peake (R-Lynchburg), who voted against it. “This budget returns none of that money to the citizens, so I prefer the House budget, which has a lot of tax cuts to give back this surplus to the citizens.”

Each chamber will take up the other’s spending plan. Ultimately, the budget will wind up being hammered out by Knight, Howell and a small group of negotiators. Lawmakers hope to finish by the end of the session on Feb. 25, but negotiations sometimes run late; last year, the General Assembly couldn’t agree on a budget until June 1.

Here are some key elements of the competing spending plans.

Tax cuts

In line with Youngkin’s proposals, the House approved cutting the corporate tax rate to 5 percent from 6 percent, at a cost of some $362 million for the two-year period.

The House also accepted Youngkin’s recommendations to increase the standard income tax deduction to $9,000 for individuals and $18,000 for married couples, from $8,500 and $17,000; lower the top marginal tax rate to 5.5 percent from 5.75 percent; create a qualified business income tax deduction of 10 percent; and other tax cuts that bring the overall total to about $1 billion.

The Senate included none of those tax cuts. Democrats have signaled their willingness to go along with increasing the standard deduction, so that might be an area of compromise. On the House side, they’ve also pushed to target more tax breaks to low-income working families.

“The middle ground is removing the governor’s corporate tax cuts. I mean, we start there and move forward,” Scott told reporters Thursday.

School funding

The Senate version is the most generous with direct aid to local school divisions, boosting funding by more than $1 billion, compared with nearly $383 million in the House plan and $321 million in Youngkin’s, according to an analysis by the nonprofit Commonwealth Institute for Fiscal Analysis.

All three spending plans would increase pay for teachers, but the details differ. The House and Senate versions would provide for the state’s share of 2 percent raises, while Youngkin’s calls instead for $5,000 bonuses for “top performing” teachers.

The amount of money devoted to reading specialists, currently provided to students through the third grade as a means of addressing learning loss due to pandemic shutdowns, differs significantly. Youngkin includes about $17 million to fund specialists to students in grades four and five. House and Senate want to cover grades four through eight, plus additional literacy support, with House funding at nearly $31 million and Senate at $51 million.

All three budgets provide an extra $7.2 million for math specialists at low-performing schools.

Youngkin and the House seek to add $50 million to the $100 million already set aside in the current budget for “lab schools,” which would partner colleges and universities with K-12 schools. The Senate wants to go in the other direction, reallocating $95 million of the original $100 million to school divisions.

The Senate would double the $20 million that Youngkin and the House want to add for preschool programs.

Other programs

  • Full-time state employees would get a one-time $1,500 bonus under Youngkin’s plan and be eligible for merit-based bonuses. The House and Senate would provide them with an additional 2 percent salary increase, with the Senate version adding a $1,000 bonus on top of that.
  • All three budgets include money to boost pay for deputy sheriffs and jail officers, about $14 million in Youngkin’s plan and the Senate’s, $15 million in the House’s. Youngkin and the Senate also provide an extra $8.6 million to boost salaries in hard-to-fill parole and probation positions; the House does not provide an increase.
  • Youngkin’s and the House’s budgets provide $500,000 to study ways to attract the Washington Commanders to Virginia. The Senate scrapped that provision.
  • The governor and House both set aside $500 million to develop “business-ready” sites to attract economic development, while the Senate provided $300 million.
  • The Senate budget devotes $210 million to boost Medicaid reimbursement rates, compared with about $43 million in Youngkin’s plan and about $54 million in the House’s.
  • Youngkin’s budget provides $58 million for mental health crisis centers, compared with $83 million in the House plan and $88 million in the Senate’s. The House and Senate budgets also add $8.4 million for children’s mental health services that Youngkin’s budget does not include.