Youngkin won’t get big tax cuts as Va. lawmakers return to tackle budget

Those cuts included reducing the corporate tax rate, trimming the top marginal rate for individuals and increasing the standard deduction, all on top of $4 billion in tax cuts the General Assembly passed last year.

Democrats balked at the recurring cuts — which would decrease state funds into the future — and instead proposed greater increases for spending priorities such as public education, teacher and state employee pay raises and mental health services.

Last month, House Republican negotiators partially conceded to Senate Democrats and dropped most of the recurring tax cuts, settling instead for one-time taxpayer rebates of $200 for individuals and $400 for couples. The deal also would increase the standard deduction to $8,500 from $8,000 for single filers and to $17,000 from $16,000 for married couples filing jointly.

Also included: restoration of the back-to-school sales tax holiday that lawmakers and the governor all forgot to reenact this year, as well as higher spending on education and mental health.

“The House Republicans wanted a budget that prioritized tax cuts for big corporations over every day Virginians, but Democrats refused to let the GOP off the hook until an agreement could be made that invested in the people and the future of the Commonwealth,” House Minority Leader Don L. Scott Jr. (D-Portsmouth) said in a written statement under the headline: “VICTORY FOR DEMS, HOUSE GOP FLIP FLOPPED.”

House Speaker Todd Gilbert (R-Shenandoah) responded to The Washington Post via text message that “the budget agreement we’re voting on isn’t perfect, but no bi-partisan agreement is. I would have liked to have seen more tax relief for Virginia families struggling with President Biden’s inflation, and I would have liked to have seen that relief be long term.”

All 140 seats in the legislature are on the Nov. 7 ballot, with control of the General Assembly at stake. Republicans controlled the House by 52-48 in this year’s session, while Democrats controlled the Senate 22-18. Flipping only a few seats in either chamber could give Republicans total power to enact Youngkin’s conservative agenda, or — in the other direction — keep Democrats in position to block it.

With Youngkin maintaining a high national profile by flirting with a presidential run that enables him to raise record-breaking amounts of cash, political pressure has worked against Republicans and Democrats compromising on any kind of budget deal.

The impasse hasn’t impacted state services. Virginia is operating on a two-year spending plan adopted in 2022, and the second-year budget went into effect on July 1. But some $3.6 billion in excess state funds has been left in limbo. School districts around the state have been particularly affected, leaving them uncertain about the scope of teacher pay raises and other funding increases.

The budget deal hammered out by negotiators includes an increase of more than $640 million in direct aid to K-12 schools and about $55 million for a 2-percent pay raise for teachers.

The House and Senate both convene at 10 a.m. and will take up individual items as amendments to the state budget.

This story is developing and will be updated.