Virginia excess revenue hits $5.1 billion, but budget negotiations flounder

Virginia’s budget amendment stalemate is reaching the point that it might be time to shelve negotiations until the next fiscal cycle if it continues much longer, according to one key legislator.

House Appropriations Committee Chair Barry Knight said Thursday he’s hoping to meet as soon as possible with two other legislators tasked with leading the state budget negotiations. But since he shared his latest proposal with them July 20, he’s heard nothing.

“If this thing continues to drag on, we may as well just wait for the new budget to come out,” the Virginia Beach Republican said. “The governor will unveil his proposed budget in the middle of December.”

The General Assembly approved a two-year budget in 2022. But legislators are now debating a series of amendments to last year’s plan, including $1 billion in tax cuts proposed by Republican Gov. Glenn Youngkin.

The negotiations are headed by Knight and Senate Finance and Appropriations Committee Chair Janet Howell and Co-Chair George Barker. The three legislators largely work behind closed doors, meaning few updates have been available to the public.

Howell and Barker did not respond to requests for comment about the budget.

Knight said he gave Howell and Barker a proposal at their last meeting.

“They didn’t say one way or the other if it was good or bad,” he said. “They said they were going to consider it and they had to carry it back to their conferees to look at. I haven’t heard a word (since then).”

Knight declined to provide any details about his proposal, including whether it included corporate tax cuts, a controversial provision backed by the governor.

Youngkin successfully pushed for roughly $4 billion in tax cuts last year. He’s trying to keep that momentum going this year by pushing to cut the corporate income tax rate from 6% to 5%, increase the standard income tax deductions for individuals and joint filers, and expand tax exemptions on veterans’ pensions by eliminating age requirements.

Earlier this month, the governor touted rosier than expected revenues, which generated $5.1 billion in excess resources during the 2023 fiscal year.

“Virginians remain overtaxed,” Youngkin said in a statement. “There is plenty of money in the system to fund our shared priorities of education, behavioral health and law enforcement while returning more of Virginians hard-earned dollars back to their wallets.”

Democrats, meanwhile, have argued against the tax cut package, particularly the corporate tax cuts, and said the funding should instead go toward education.

During a Wednesday news conference, Sen. Monty Mason, D-Williamsburg, said there was room for negotiation on some items, like the tax break for military veterans. But overall, he said Democrats maintain the focus must be on schools and students.

“What we have focused on the entire time since we left session is that we believe, even prior to the JLARC report coming out, that we (should be) putting our resources and our money toward education,” he said.

The Joint Legislative Audit and Review Commission (JLARC) conducts research and oversight of state agencies on behalf of the Virginia General Assembly. A report released earlier this month found that, on average, school divisions in other states receive 14% more per student than school divisions in Virginia.

If the budget conferees agree on a proposal, the General Assembly will reconvene to vote on it.

Katie King, katie.king@virginiamedia.com