The state of Virginia is in a fiscal position that requires both a billion-dollar tax cut and an increase in government spending, Gov. Glenn Yongkin said Thursday as he unveiled his proposed revisions to the biennial state budget.
The Republican governor is calling on lawmakers to cut corporate tax rates and lower incomes. Youngkin made the case in a speech in Richmond that his vision was fiscally responsible and would not only help families dealing with a poor economic outlook but also make Virginia more competitive in attracting new businesses. does
“This budget accounts for the reality of the growing economic storm. It also accounts for the need to accelerate results, and the fact that our state’s finances have never been stronger,” Yingkin, a former private equity executive, House And told members of the Senate Finance Committee.
The governor’s proposed amendments to the 2022-2024 budget will serve as a starting point for negotiations when the politically divided General Assembly convenes in January. The spending plan typically goes through significant changes before lawmakers send it back to the governor for his consideration and possible further amendments.
Yingkin campaigned last year on a promise to cut taxes, and already signed nearly $4 billion in tax relief into law earlier this year.
This time, he’s asking lawmakers to increase the standard deduction again and lower the rate in the highest income tax bracket, which starts at $17,001, from 5.75% to 5.5% if the general fund earns Fulfill the prophecy. His office estimates that his proposed changes would save four families an average of $578 a year.
His plan does not include a new push for the gas tax holiday or the complete elimination of the rent tax, which was cut earlier this year.
In addition to the corporate tax rate being reduced from 6% to 5%, Youngkin also wants to create a nationwide 10% business income tax rebate for small businesses and “pass-through entities.”
Some Democrats raised concerns about those proposals at Thursday’s meeting. Finance Secretary Stephen Cummings defended the focus on the corporate tax rate, which he called a “headline number” and an important signal to businesses deciding where to set up shop.
The governor’s office said in a briefing document shared with reporters Thursday ahead of Thursday’s speech that although the impact of inflation, rising interest rates and the potential for a deficit next year There is growing concern, Virginia is still in a state of continuity. Another reduction in tax revenue.
“As a result of a conservative budget and unprecedented balance sheet strength, the Governor is confident that the Commonwealth is in an excellent position to excel before, during and after challenging economic conditions.”
It noted that the state’s rainy day fund balance is on track to reach $4.2 billion by the end of fiscal year 2024.
On the cost side, Youngkin wants $450 million to identify and acquire industrial properties. Youngkin said he thinks the state should work harder to produce business-ready sites that might attract large manufacturing employers. That funding will top $150 million in so-called “megasites” earlier this year, and more than $100 million over the past decade in a series of sites with little to show for it. , found an earlier review from the Associated Press
The governor proposed an additional $427.7 million for public education that he said would combat the loss of education caused by the pandemic and boost funding for his “lab school” initiative.
He wants to pay teacher retention bonuses next August as well as a pool of money to improve talent, proposals quickly approved by the Virginia Education Association.
Youngkin called for spending $674 million on “long-delayed environmental projects and Chesapeake Bay initiatives,” including efforts to clean up waterways that flow into the bay.
Under his proposal, the city of Richmond would receive $100 million to help fix remaining problems with its aging combined sewer system, which carries both sewage and stormwater and often includes the James River. Convey waste to waterways.
The governor is also asking for an additional $230 million on initiatives to improve behavioral health services, a goal he outlined at an event Wednesday.
Republicans who control the House of Representatives applauded Youngkin’s proposals.
House Appropriations Committee Chairman Barry Knight, a Republican from Virginia Beach, said he thinks the governor’s plan is “a good place to start.”
He said the budget was carefully crafted and the tax cuts continued, given that some of them come with stimulus that means they won’t meet revenue projections.
“We know it’s a government expense. We know we’ve got some extra revenue, but — you know — our crystal ball isn’t very forward,” he said.
Democrats who control the state Senate were less generous. Janet Howell, co-chair of the Senate Finance and Appropriations Committee, predicted that Youngkin’s tax cuts would be “very controversial.”
“We have a long list of unmet needs in the state, things that the General Assembly has promised over the years, but we haven’t done. So this is our opportunity to live up to what we’ve promised.” Already promised.” she said
Yingqin – who has not publicly ruled out a possible 2024 presidential bid – ended his speech by urging lawmakers, who all face the 2023 election, to work together.
“In the next few weeks, are you going to suffer from the partisan bias of an election year? Or are we all going to rise up together and show that yes, we can get things done? He said.