Virginia lawmakers approve budget with tax cuts, spending increases

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correction

A previous version of this article incorrectly reported that Del. Don L. Scott Jr. is the first African American to serve as leader of Virginia House Democrats. He is the first African American man to do so. The article has been corrected.

RICHMOND — The Virginia General Assembly passed a two-year state budget Wednesday that both cuts taxes and increases spending, a rare combination that drew extensive bipartisan support in both the Democratic-controlled Senate and Republican-controlled House of Delegates.

“It’s been a long haul, but I think the result is a fiscally sound, bipartisan budget we can all be proud of,” House Appropriations Chairman Barry D. Knight (R-Virginia Beach) said in a floor speech, praising fellow budget negotiators on both sides of the aisle.

“We might differ on our policy positions, but when it comes down to it, we share the mutual goal of developing the best budget for the commonwealth and its citizens,” Knight said.

The two-year spending plan passed the House 88-7 and the Senate 32-4.

“I believe we were able to build a budget that we can be proud of that encompasses state spending priorities and additional tax policy relief, while also upholding our tradition of strong fiscal management,” Sen. Janet D. Howell (D-Fairfax), chairwoman of the Senate Finance and Appropriations Committee, said on the floor ahead of the vote.

Negotiations on the budget had dragged out since the General Assembly wrapped up its regular legislative session March 15 without a deal. The House had favored a package of tax cuts pushed by Gov. Glenn Youngkin (R) that was $3 billion more generous than those passed by the Senate.

The compromise budget passed Wednesday gave Youngkin many but not all of his priorities — thanks to a surge in state revenue attributed to both a strong economic recovery and billions in federal aid related to the coronavirus pandemic.

The centerpiece is a sharp increase in the standard income tax deduction, from the current $4,500 for individuals and $9,000 for joint filers to $8,000 and $16,000, respectively. That’s just short of Youngkin’s goal of doubling the amounts.

The increases take place only if state revenue continues to grow by certain amounts, and are set to end before the 2026 tax year.

The budget also eliminates the 1.5 percent state tax on groceries but leaves intact the additional 1 percent grocery tax that localities may levy. Youngkin wanted to eliminate both.

Lawmakers did not agree to suspend the state’s gasoline tax, which Youngkin had proposed. But they went along with his proposal to reduce taxes on military pensions, which they would phase in over several years.

The General Assembly’s budget also achieves a longtime goal of Democrats: making 15 percent of the earned income tax credit refundable for low-income working families.

Along with the tax cuts, the budget would provide 5 percent pay raises for teachers and state employees over each of the next two years, as well as additional money for law enforcement and higher education. Its commitment of $19.2 billion to public education is the most the state has ever budgeted for that purpose, even when adjusted for inflation, according to Knight.

The handful of lawmakers who voted against the budget in the House were mostly Democrats who argued that certain spending priorities had received short shrift during a time of massive surpluses — such as affordable housing, gun violence prevention and transportation projects.

In the Senate, Sen. R. Creigh Deeds (D-Bath), who lost a son to mental illness in 2013, said he wished the plan had done more to boost pay for workers at psychiatric hospitals.

“We had opportunities, and we didn’t seize them,” Deeds said.

Several Democrats expressed hope that Youngkin will not wield his line item veto power or amendment pen to tinker with the budget. But Sen. Ryan T. McDougle (R-Hanover) said he would “invite” the governor to make changes to fully repeal the grocery tax and reduce gas taxes through a holiday or some other means.

“There is more work to be done for Virginians,” McDougle said.

The state needs to have the budget in place by July 1, the start of the next fiscal year.

Some lawmakers objected to the “opaque” way a handful of negotiators had produced the budget deal, and charged that the document had been used as a backdoor way to pass legislative issues that otherwise stalled during the regular session.

“That’s how they do things in Washington, DC That’s not how we used to do things here,” said Del. Marcus B. Simon (D-Fairfax).

The top example of that was language in the budget that creates a new category of crime for marijuana possession. The state began the process of legalization last year, making it legal for adults to possess an ounce or less of weed, imposing a small civil fine for amounts above one ounce and below a pound, and making it a felony to possess more than a pound .

Under the new budget language, it would be a misdemeanor to possess more than four ounces or up to a pound.

sen. Jennifer L. McClellan (D-Richmond) objected to the marijuana provision as an example of “legislating through the budget.”

“A handful of people that didn’t include a single member of the legislative Black Caucus decided new criminal penalties … with no real opportunity for public input,” she said. “I hope that is not a process that we choose to use in the future.”

Before acting on the budget, Democrats in the House of Delegates elected Del. Don L. Scott Jr. (Portsmouth) as their leader Wednesday, marking the first time an African American man has served in the role.

Scott led the effort last month to oust former Speaker Eileen Filler-Corn (D-Fairfax) as House minority leader, in part over Democrats’ failure to hold onto their majority in the House in last fall’s elections.

Virginia Democrats leadership fight grows after House ouster

He beat out two other veteran lawmakers for the role: Del. Charniele L. Herring (Alexandria), who is Democratic caucus chairwoman, and Del. Richard C. “Rip” Sullivan Jr. (D-Fairfax).

Several Democrats said they supported Scott as the best leader to help the party regain a majority in the House.

Scott told reporters that he intends to be an inclusive leader who helps Democrats do a better job of communicating and achieving their priorities.

“There are too many people that are hurting. There are too many people that need us. And when we don’t do the things that we promise to do, then real people hurt,” he said.

Scott accused Youngkin and other Republicans of using the pain of inflation and other ills as political talking points, and said Democrats instead want to solve problems such as keeping communities safe, providing excellent education and expanding access to health care.

“We don’t want to fight the culture wars,” he said, and took a swipe at Republicans for failing to work for gun control in the wake of recent firearm violence.

“The same people who said they did not want people to wear a mask will have our children wearing body armor pretty soon because they want to arm teachers to fight,” he said.

Garren Shipley, a spokesman for House Republican leadership, dismissed Scott’s accusation about priorities. “Advocating for high standards in our schools, safe neighborhoods and providing tax relief to hard-pressed families isn’t ‘fighting the culture wars.’ It’s addressing the issues that voters sent Republicans to Richmond to address,” Shipley said via text message.

Scott, a lawyer, is part of a new wave of House Democrats elected since Donald Trump took the White House in 2016 and energized opposition to his Republican administration. He won his seat in 2019 and again last year in a safe Democratic district.

Known as a fierce floor debater, Scott cast himself early in this year’s legislative session as a voice of opposition to the policies of Youngkin. After Youngkin invoked unity and religion when he was sworn in as governor in January, Scott made an impassioned floor speech imploring the governor to stop using race as a way to fire up conservatives, citing his continued campaign against racial equity policies in public schools.

“So far, what I’ve seen from his Day 1 activities is not someone who is a man of faith, not a Christian, but someone who wants to divide the commonwealth,” Scott said in that speech.

Youngkin responded by walking across Capitol Square for a private meeting with Scott in his legislative office. The two shook hands, and Scott said later he was looking for a more cooperative tone from the governor. But as the legislative session played out, Scott continued to serve as a provocative voice against Youngkin’s policies, particularly in the areas of race and criminal justice.

Scott brings a unique background to the role: A former Navy officer who was born in Texas, he served time in prison on drug charges in the 1990s. He had his civil rights restored by then-Gov. Terry McAuliffe (D) of Virginia and went on to a prominent role in legal and community circles in Portsmouth.

After hard-charging start, Youngkin faces tricky work of relationship building

Democrats selected Scott as their leader Wednesday morning in a closed caucus meeting. Each candidate for the leadership role made a speech to the delegates — Sullivan appearing by way of a recording because he was on a personal trip overseas. The vote was conducted by secret ballot.

With the General Assembly about to convene to take up the state budget, Democrats ran out of time to tally the results of the caucus vote. They made the final count later Wednesday during a break in the floor session.

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