by Dick Hall-Sizemore
Governor Youngkin and General Assembly leaders have reached a deal on the budget for the next biennium. Based on press reports, it is difficult to say who won this battle. That’s the hallmark of a compromise.
The process started off in December with the governor saying the state had more than enough money to fund its needs and, thus, he proposed an overall cut in tax revenue. The legislature responded by saying, “Oh, no. There are a lot of unmet needs. We need all the extra revenue that is available and more on top of that.” Therefore, they proposed a tax increase. The governor responded with a bushel of proposed amendments that would have undone much of what the legislature had proposed. The Democratic majorities in both chambers rejected those amendments. Both sides agreed to adjourn and negotiate.
In the meantime, the Virginia economy was perking along and producing even more tax revenue than projected. Now the Democrats have the money they need to fund their priorities without raising taxes. The compromise proposal provides healthy raises for state employees and teachers, more funding for K-12, more money for higher ed so as to discourage tuition increases, money for Metro in Northern Virginia and for toll relief in Hampton Roads, and lots more money for mental health services. The result is that the Governor does not get his proposed tax decrease and the Democrats do not get their proposed tax increase but do have enough proposed funding to pay for their highest priorities. In a way, the Democrats seem the winners, but the governor has not objected to the uses of the additional money. In fact, his proposed budget included additional money in all these areas, just not as much as the Democrats wanted.
So far, there has been no mention in the press whether all this additional available revenue will be sustainable in the future. In budget terms, is the proposed budget “structurally balanced’? Is there a lot of one-time revenue included that will not be available for future biennia? Some of the staff at the Department of Planning and Budget and the staffs of the money committees, as well as some of the General Assembly leaders, have a good idea as to the answer to this question, but they will not be talking about it.
Youngkin scored one other major win with this compromise. The General Assembly negotiators backed off the legislature’s insistence that the Commonwealth re-join the Regional Greenhouse Gas Initiative (RGGI). (The Democrats are probably betting that they will hold onto their House majority in the 2025 elections and a Democrat will be elected governor.)
In a couple of side skirmishes that have been going on in the budget process, the governor lost. Under the compromise proposal, the Virginia Alcoholic Beverage Control Authority will become completely independent of the executive branch. Also, the governor will be prohibited from demolishing the Monroe Building and relocating state employees elsewhere, pending a study of the downtown office needs of the state. (The Monroe Building is the tall office building that seems to be teetering on the edge of I-95.)
This proposed budget compromise can be summarized easily. Gov. Youngkin threatened to veto any budget proposal that included a tax increase. The Democrats, finding they had enough money to do what they wanted to do, decided not to see if he was bluffing.
