Category Archives: Budgets

by Steve Haner

Virginia’s Democratic legislators are convinced that citizens are happy to pay taxes for state services and will rebel at the polls if taxes are cut when there are “unmet vital needs.”  That is why they have so far resisted any and all proposals from Governor Glenn Youngkin and Republican legislators to split the state’s fat cash surplus between tax relief and more spending.

So, why are those same Democrats not applauding the 2023 General Assembly’s failure to extend the state’s previous pre-school sales tax holiday? Shouldn’t the voters be happy to pay more for school supplies and clothes since the schools need the money? Instead they are joining the scramble to reinstate that tax break, open to all taxpayers, rich and poor.

The good news is the Assembly’s incompetence (or was it an accident?) in letting the sales tax holiday lapse is providing another prod to keep Democrats at the table for tax policy discussions. Frankly, from a tax policy purist point of view, these tax holidays are not good policy, but they are wildly popular.

That is because the sales and use tax is one people can see at the checkout counter. If you are saving $6-$7 on a Target run or Amazon bill, you notice. The other tax cuts under discussion – a higher standard deduction, a tweak to the income level that triggers the top income tax rate – only come up at tax-filing time, and if you use a computer program or outside accountant to file, you may never notice.

The bad news is that now the General Assembly can come together and fix this oversight (if it was an oversight) and claim a victory for taxpayers. They will claim a bipartisan victory over something that leaves those taxpayers exactly where they were a year ago, no better off at all. From the beginning, the claim that nobody had put the sales tax holiday on the Assembly’s radar during the session has lacked credibility. If so, retailers need new lobbyists. Continue reading →

by Steve Haner

Because the federal government cannot operate without constantly borrowing money, members of Congress in both parties recently held their noses and voted for a compromise budget and borrowing deal. That need not and should not happen now in Virginia.

There is no similar pressure in Virginia, even though the June 30 end of the state fiscal year approaches. Virginia has a viable, fully balanced budget that runs through June 30, 2024. The stalemate underway involves only unadopted second-year amendments.

Governor Glenn Youngkin and the House of Delegates should insist that any amendments to that new fiscal year budget include every dollar of tax relief they approved earlier this year. None of the spending increases approved by either the House or the Virginia Senate should be included unless the full amount of tax relief accompanies them.

If the July deadline passes with no action, with no agreement to couple tax cuts with spending increases, Virginia’s Republican legislators will have accomplished what their colleagues in Washington failed to do (and in fairness couldn’t do). They will have stood firm until the taxpayers received the same level of consideration as those who consume those taxes.

The real decision deadline is Election Day in November. Continuing the stalemate would give the voters a clear choice between the House vision of tax relief coupled with reasonable spending growth, or the Senate vision of mainly higher spending and zero tax relief. Continue reading →