Virginia tax increases: Outlook for 2020

By Don RippertPromises, promises.

As Virginia’s new Democratic majority in the General Assembly starts to take power, three issues emerge. First, many of the winning Democratic candidates promised deeper and broader social benefits from the state. Expanded Medicaid, more money for K-12, more money for higher education, more money for green initiatives, etc. Second, few of the winning Democratic candidates spent any time describing just how these expanded social benefits would be financed. Politics as usual. Third, regardless of their expressed political philosophy, the vast majority of Virginians do not want to pay higher taxes. What now? Will the Democrats stick with reforms that don’t require new taxes or move into change areas which can only be implemented with “mo’ money”? If the latter, will the Democratic majority transparently raise taxes or engage in opaque budget trickery?

Do pass go, do not collect (higher taxes of) $200. The winning Democratic candidates in the 2019 election made a bet. They bet that loathing for Donald Trump would be enough for the Democrats to pull off a trifecta – control of the house, senate and governorship (already in place before 2019). Vague promises around gun control were easy to make. Most Virginians support at least somewhat stricter gun laws and those new laws cost virtually nothing to implement. Senate Majority Leader Sen Dick Saslaw, D-Mecklenburg, has already patroned five potential gun control bills. No doubt gun control legislation will pass. Minimum wage increase? Politically easy. While such an increase is fraught with possible economic downside it requires no new taxes to implement. There is a high probability that increases to the state minimum wage will pass. But what about the promises to improve healthcare, transportation, education and the environment – promises that cost money to keep?

Don’t roll snake-eyes. Despite their public rhetoric to the contrary, a Trump re-election would not be the worst thing for Virginia’s Democrats in the General Assembly. In fact, it would be the best thing. If Trump is re-elected in 2020, the Dems would once again run to the limelight to cry their crocodile tears as they bemoan the ongoing disintegration of all that is good in America. Behind closed doors those crocodile tears would quickly evaporate. Four more years of Trump Derangement Syndrome (TDS) would be a boon to the Dems in Virginia. A General Assembly majority across the 2021 and 2023 elections would be all but guaranteed. No doubt another Democratic governor in 2021 as well. But what if Trump loses? What if Elizabeth Warren or Joe Biden or Pete Buttigieg becomes president? No more TDS in 2021. In fact, more likely the onset of xDS where x=the initial of the Democratic president. The Democratic trifecta in Virginia could be short lived. Dems have to know that the 2020 General Assembly session is not the time to raise taxes. Could you imagine being a Democratic incumbent delegate in 2021 running against a tsunami of Warren Derangement Syndrome after having voted to raise taxes less than two years prior? Buh bye.

Rip’s Wrap. The 2020 General Assembly session will steer far clear of any legislative initiatives that require much in the way of additional government revenue (i.e. higher taxes). There’s too much at risk at the national level. Every Democratic candidate for president is clamoring to raise taxes  If one of them gets elected there will be a major backlash against big government tax-and-spend politicians. Remember that Obama’s election on a platform of bigger government and higher taxes in 2008 spawned the Tea Party of 2009.

Initiatives that get funded opaquely through hidden higher prices rather than taxes will be on the table. Northam has already gone down this path by funding Virginia’s contribution to Medicaid expansion through a tax on hospitals. I guess the largely not-for-profit hospitals will somehow eat that tax without passing it on. Demanding more green energy from Dominion for example or raising the minimum wage allows for the costs to be opaque. Voters don’t throw out politicians over taxes they can’t see.

Virtue signaling will be what the Dems use to appease their base. Whether “one gun a month” lowers gun violence or not is a matter of conjecture. NPR-affiliate WCVE says in reference to the previous one-gun-a-month law that was repealed, “WCVE could only obtain federal firearm trace data back to 2006 but is seeking that data going back to 1993 when the [original one-gun-a-month] law went into effect. The data we have shows little difference in the number of Virginia guns that were recovered in other states prior to and after the law was repealed in 2012.”  Expect “one gun a month” to pass in 2020.

The odds of an overt tax hike of any significance coming out of the 2020 General Assembly session, either immediate or deferred, are minimal.

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11 responses to “Virginia tax increases: Outlook for 2020”

  1. Steve Haner Avatar
    Steve Haner

    In general I agree the likelihood will be dashed hopes and broken campaign promises, rather than higher taxes. But the financial projections provided by the House Appropriations and Senate Finance Committee staff presentations last month showed some comfortable revenue growth for FY 21 and 22, meaning the state has some boodle to play with. The economy is doing well, and the money continues to flow from the policy decision to 1) conform to the federal changes and 2) only pretend to give it back to taxpayers. But that’s another post…..when I get the energy.

    December 17 is the next big day, as the clans gather to hear His Excellency discuss and then publish his budget.

    1. djrippert Avatar

      There’s a fair amount of boodle. But there were a lot of promises made. From my Delegate …

      “I started the Rare Disease Caucus to help families who deal with the challenges of a child or family member who has a rare disease. I have offered legislation to expand coverage for several rare diseases.”

      “It is essential that we tackle the problems associated with opioid abuse, including over prescription. There should be treatment options available for these addictions to help with recovery.”

      “Unfortunately, our schools are underfunded, and our teachers are underpaid.”

      “For too many years we have deferred investments in our infrastructure. This has not only impacted our economic growth, it is a safety issue. Our roads, highways, and bridges are our lifeline. Rebuilding, repairing, and improving aging roads and bridges must be a priority.”

      As a side note … James A Bacon received a write in vote in the last election. I would not vote for the incumbent state senator who was running unopposed.

  2. LarrytheG Avatar

    How about Rips RUT ?

    I agree and further predict that Northam will threaten vetoes… of most overt tax increases especially if Aubrey Layne demurs but “fees” may wiggle their way in on some things.

    I also think potential gun restrictions are in trouble as a slew of counties are declaring themselves “sanctuaries”… and I suspect many are Trump folks!

    I think they may try to weaken Dillon … allow towns cities to remove Confederate monuments, and perhaps make it easier for citizens to participate in referendum …

    will there be stinky politics?

    do bears do it in the woods! (that’s for you Steve)!

    1. djrippert Avatar

      Gun restrictions are a done deal. The only question is regarding the severity of those restrictions. The strength of Dillon’s Rule in any state is pretty fluid. By and large Virginia has a strict implementation. I believe the Dems will make it less strict. Allowing municipalities to decide what to do with statues in their locality has a good chance of being implemented. No tax required. Allowing municipalities to set their own tax on cigarettes … maybe.

  3. Steve Haner Avatar
    Steve Haner

    If the GA passes a bill to allow the localities to remove “secesh” statues, that preserves the principle of the Dillon Rule. Keeps the GA in ultimate charge of what localities can or cannot do. But I agree an effort to truly gut the rule is likely. No way are the gun restrictions in trouble….I can call the roll on those now.

  4. Plausible analysis regarding the odds for a general tax increase. If there’s enough new revenue from economic growth, there will be plenty of dough to appease a wide range of constituencies. So, Don may be right. We may not see a general tax increase.

    One big question, which Don has raised, is whether legislators can find new sources of opaque and/or indirect sources of new revenues — the ol’ “revenue enhancement” trick. I expect they’ll be looking.

    A bigger question is whether Finance Secretary Layne proposes using some of that boodle to continue shoring up the state’s finances — rainy day funds, cash reserves, paying down VRS liabilities, etc. — so the state will be in better shape in the event of another recession. I find it difficult to imagine that the Dems will have much patience with that brand of fiscal conservatism. They’ll want to spend every dime they can lay their hands on.

  5. Probably the green initiatives they do as much as possible to increase utility rates so they can say they did not increases taxes that much.

    1. djrippert Avatar

      You got it.

  6. LarrytheG Avatar

    If Layne uses surplus to bring VRS into better balance, that makes good sense and I suspect all but the partisan boo birds will be okay with it.

    I also think most voters will be okay with more money to K-12 and Community colleges (but not dorms).

    And yes.. if there is perceived “excess” revenues… after that – I’m doubtful that it comes back as a “refund”.

    It’s the hyper political wedge issues that will roil the politics and I stick by my prediction on gun rights. It may well come down to the Urban Dems prevailing over the rural GOP and any wayward rural Dems.

    In our area, in the last week, we’ve had no less than 5 counties vote to become gun rights “sanctuaries”and the Sheriffs have dutifully come to the podium and uttered defiant words to that effect. Remember they ARE elected!

    That’s in our region which is not as hard core as the rural counties.

    I think it’s gonna be an issue and it’s going to be exploited politically. Ya’ll should check around.

  7. TooManyTaxes Avatar

    Never underestimate the ignorance and stupidity of Fairfax County voters. Many of them can mentally reconcile their anger that Fairfax County receives only pennies on the dollar from the State with a willingness to pay higher state taxes for “good stuff.”

  8. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    I see folks are now in agreement with my earlier prediction ( that the General Assembly was unlikely to raise taxes next year.

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