Virginia Gov. Glenn Youngkin laid out his proposed changes to the two-year state budget Thursday, asking lawmakers to enact another $1 billion in tax relief, including a corporate tax rate cut.
The Republican governor also wants to increase the standard deduction again after doing so earlier this year and reduce the top income tax bracket rate from 5.75% to 5.5% if general fund revenues meet the forecast. His office estimates his proposed amendments to the 2022-2024 budget would save the average family of four $578 a year.
Youngkin was set to outline his proposals in a speech before the House and Senate money committees. The governor’s proposed amendments will serve as a starting point for negotiations when the politically divided General Assembly convenes in January. The spending plan typically goes through substantial changes before lawmakers send it back to Youngkin for his consideration and possible amendments.
Youngkin previously signed around $4 billion in tax cuts into law earlier this year. The governor’s office made the case in a briefing document shared with reporters ahead of his Thursday speech that although there is growing concern about the effect of inflation, rising interest rates and the possibility of a recession, Virginia is still in a position to sustain another reduction in tax revenues.
“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 periods of challenging economic conditions,” the document said.
It noted that the state’s rainy-day fund balance is on track to hit $4.2 billion by the end of fiscal 2024.
“In the event of a recession, Virginia will be able to avoid raising taxes or cutting needed public programs by maintaining revenue reserves greater than 15% of expected revenues,” the briefing document said.
In addition to a corporate tax rate cut from 6% to 5% Youngkin also wants to create a statewide 10% business income tax deduction for small businesses and “pass-through entities.”
He’s proposing an additional $427.7 million for public education that he said would combat learning loss caused by the pandemic and boost funding for his “laboratory schools” initiative.
Other proposed amendments to the budget include $450 million to identify and acquire industrial properties. Youngkin has said he thinks the state needs to work harder to produce business-ready sites that might lure a major manufacturing employer. That funding would be on top of $150 million previously allocated for so-called “megasites” earlier this year, plus well north of $100 million spent over the past decade on a series of sites with little to show for it, a previous AP review found.
Youngkin also wants to spend $674 million on “long-delayed environmental projects and Chesapeake Bay initiatives,” including efforts to clean up the waterways that flow into the bay.
Under his proposal, the city of Richmond would get $100 million to help fix the outstanding problems with its aged combined sewer system, which carries both waste and storm water and often overflows, sending sewage into waterways including the James River.
Youngkin also wants to spend an additional $230 million on initiatives to improve behavioral health services, a goal he outlined during a Wednesday event.
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