RICHMOND, Va. (WRIC) — A push to repeal a portion of the grocery tax is in jeopardy after a must-pass Senate panel rejected a bipartisan deal.
On Tuesday, the Senate Finance and Appropriations Committee failed to advance legislation that sought to slash the state’s component of the 2.5 percent grocery tax, which goes towards K-12 schools and transportation. This version would’ve maintained the one percent local component, rather than eliminate the tax entirely as Governor Glenn Youngkin and House Republicans have called for. It would also to exempt menstrual and other hygiene products from the sales tax.
“I think everyone was in agreement that we need to do something in order to address this and we are certainly behind many other states in addressing the grocery tax, which is one of the more regressive taxes that we have,” Senator Ryan McDougle (R-Hanover) told the committee.
The bill failed to report on a 9-7 vote, with mostly Democrats and one Republican opposed. After the initial vote, the committee decided to reconsider and revisit the bill down the road after further negotiations.
Senator Jennifer McClellan (D-Richmond) raised concerns about the long-term stability of K-12 school funding. The deal considered on Friday would’ve replaced the lost revenue stream for schools with general fund dollars allocated in the two-year budget. Senator George Barker (D-Fairfax) said it’s designed to be a permanent fix but McClellan contested that.
“So for two years, we know money lost for education will be restored but beyond that, who knows,” McClellan said.
Senator Chap Petersen (D-Fairfax) said repealing the state’s component of the grocery tax may ultimately disadvantage wealthier schools in his Northern Virginia district. He fears they will get less money back if the funding is distributed with a need-based formula rather than student population size.
“For those of us in Northern Virginia, I have extreme doubts that we’ll see the same return,” Petersen said.
Senator Emmett Hanger (R-Augusta), the lone Republican “no” vote, fears the General Assembly is rushing tax reform.
“Tax policy is something that needs to be generated through thoughtful consideration and I don’t consider what we are doing now thoughtful consideration,” Hanger said.
On a bipartisan vote of 11-3-1, the committee opted to defer action on doubling the standard deduction for state income tax. The plan is to study it before the 2023 session instead of acting immediately.
Asked about slowing down some elements of his tax reform agenda in a recent interview, Governor Youngkin said, “There’s plenty of money in the system. I’m disappointed in some of the statements coming out of the Senate because they’re purely partisan. We’ll pass our whole agenda in the House and the Senate will have another chance because, what I hear from individual senators, is they’re very much supportive of many, many elements of our Day One Game Plan. This is a moment for us to deliver for Virginians.”
Despite disagreement on some components of Youngkin’s plan, the Senate panel unanimously approved a bill to give money back to taxpayers through one-time rebates.
Youngkin proposed $300 for individuals and $600 for joint-filers. The committee didn’t vote on a specific amount, instead leaving flexibility to decide on a number later in the budget process.