RICHMOND, Va. (WRIC) — Virginia lawmakers are drawing battle lines in the upcoming budget fight with tax relief at the center. The starting point during the closed-door negotiations is likely to be targeting aid to individuals rather than corporations.
Over the weekend, House Republicans and Senate Democrats released spending plans with very different visions.
Unlike last year, when some matching offers resulted in a A $4 billion tax compromise in the biennial budgetthe Senate rejects the new plan entirely Gov. Glenn Youngkin’s $1 billion package additional amendments. Republicans are confident that some elements of Youngkin’s tax relief plan will emerge from the negotiations, but at least for now, Democrats are not giving in.
“We’ll see at the end of the day, but right now we’re pretty confident it’s not going to happen,” Senate Finance and Appropriations Committee Co-Chair Janet Howell (D-Fairfax) said in a recent interview. “There’s no reason to give corporations extra benefits when families might need help.”
Youngkin wants to lower the state’s top individual income tax rate, paid by the vast majority of working Virginians, from 5.75 percent to 5.5 percent, but critics say that won’t help the lowest-income earners.
In an interview Monday, House Appropriations Committee Chairman Barry Knight (R-Virginia Beach) said his top priority would be to further increase the standard deduction to $9,000 for individuals and $18,000 for married couples filing. together. The standard deduction is currently $8,000 and $16,000, respectively, after lawmakers nearly doubled it last year despite initial opposition from Senate Democrats.
“The standard deduction primarily helps low-income people. We moved the needle a lot last year, but this year we could move it a little bit more, so the standard deduction will be the first thing I think we can compromise on,” Knight said. “I think I understand some of the concern of the Senate, but it’s all budget negotiations and we’re going to ask for tax relief. I don’t know if we will get everything, but we will definitely ask for it.”
After a Senate panel last week rejected several tax relief proposals, Senate Republican Leader Tommy Norment (R-James City), who voted for the bills, predicted a push to lower the corporate tax rate from 6 percent to 5 percent. % would be “much harder to raise” during negotiations, as it proved more controversial among Democrats.
“I just think that lowering the corporate tax rate is going to be a more difficult task, and the Virginia business and corporate community hasn’t been pushing for that since the bill was introduced,” Norment said.
Norment also suggests that raising the standard deduction and lowering the top personal income tax rate has a better chance of making it into a budget deal. One Democrat, Sen. Chap Petersen (D-Fairfax), sided with the Republicans and voted against the motion to kill the bill in committee.
The Senate plan also eliminates Youngkin’s proposed tax breaks for some small businesses and an attempt to expand tax credits for veterans by eliminating the age limit. It also reduces Youngkin’s proposed deposit to the Taxpayer Relief Fund from $128 million to $75 million.
Instead of tax cuts, the Senate budget includes roughly $637 million in additional direct aid to local public schools compared to the House plan, according to a budget breakdown by the Commonwealth Institute for Fiscal Analysis. The comparison shows that the Senate plan favors greater investment in additional support staff, reading specialists, English language learner teachers and funding for high-poverty school divisions. The Senate budget also appears to cut $95 million Youngkin Laboratory School Initiative which already allocates grants.
“What we’re doing is we’re sending a message to the people of Virginia that education is a priority for all of us,” said Senate Appropriations Committee Co-Chairman George Barker (D-Fairfax). “We have already considered many tax issues. We felt that now we need to make sure that we provide adequate funding for the services that Virginia needs.”
The House and Senate budgets include additional 2 percent raises for state employees and teachers for a total of 12 percent over two years. The cone was not included in Youngkin’s budget amendments.
In a statement Sunday evening, Governor Youngkin said:
“When I introduced my proposed budget amendments in December, I said we need to lower taxes to make Virginia more competitive for families and businesses, invest more in education to help children recover from learning loss, invest more to recruit 2,000 new law enforcement heroes, and take an important first step in transforming our behavioral health system. Those are still our goals, and I look forward to hearing today’s House and Senate proposals. I am confident that by working together with Chairman Knight and Co-Chairs Howell and Barker, we will be able to get the job done for the people of Virginia.”