RICHMOND, Va. (WRIC) — Governor Glenn Youngkin released his proposal for additional tax relief on Thursday.
It’s just one component of the budget plan he unveiled in a speech to members of the General Assembly, which also proposes new investments in education, behavioral health, public safety, economic development and environmental initiatives.
The plan will have to win approval in a politically divided government. Democrats currently control the state Senate and Republicans have a majority in the House of Delegates.
Overall, Youngkin is proposing an additional $1 billion in tax relief and over $2.6 billion in new spending commitments.
State lawmakers increased the standard deduction for state income tax earlier this year but Youngkin wants to go further. His plan would increase it to $9,000 for individuals and to $18,000 for married couples filing jointly. Youngkin also wants to eliminate the age requirement for veterans to claim the recently approved income tax subtraction for military retirement income.
Youngkin wants to lower the corporate tax rate from 6% to 5%. He is also pushing for a 10% tax break for small business income.
If revenues meet expectations down the road, Youngkin wants to reduce the individual income tax rate from 5.75% to 5.5%.
Youngkin said these steps are essential to “win the race for jobs,” compete with other states and stop people from moving out of Virginia.
To bolster business recruitment, Youngkin is also proposing funding to develop new sites, innovate in the energy sector and expand workforce development programs.
“Starting down this path is to reject false choices presented in the past. Yes, Virginia, we can choose competitive taxes, economic growth and critical investment priorities,” Youngkin said.
In his speech, Youngkin acknowledged Virginia is expected to follow the national economy into a recession next year, which could last six months or more. Still, he said the state remains flush with cash.
“This budget accounts for the reality of the looming economic storm, the need to accelerate results, and the fact that our state government’s financial condition has never been stronger,” Youngkin said.
Youngkin is proposing an additional $428 million for public education, including investments in reading and math specialists to combat learning loss. The plan includes roughly $100 million for retention bonuses for instructional and support positions, as well as merit-based bonuses for stand-out teachers. He also wants to put more money towards his lab school initiative.
“We must accelerate our efforts to bounce back from the damage done by closing our schools and lowering standards,” Youngkin said.
On Wednesday, Youngkin announced a plan to improve the behavioral health system. Those steps are also included in his budget proposal. They include efforts to increase the state’s capacity for handling mental health emergencies and expand school-based treatment programs.
Youngkin’s package lays out steps to accelerate the rebuilding of the nursing pipeline, noting that Virginia’s hospitals have identified a shortage of more than 4,000 nurses.
The budget plan contains efforts to recruit and retain law enforcement. Youngkin’s public safety package also has funding for violence intervention grants, public defenders and witness protection.
“Law enforcement vacancy rates are routinely 20 percent and are approaching 40 percent in some cities in Virginia,” Youngkin said. “Prosecution has dropped significantly, witnesses are less willing to come forward, and it’s clear that Virginia’s blue line has gotten far too thin.”
Youngkin’s plan sets the stage for budget negotiations ahead of the 2023 session, which kicks off in January.
Senate Finance Committee Chair Janet Howell, the General Assembly’s top Democratic budget negotiator, said Youngkin’s plan is a good starting place but his tax cuts “will become very controversial.”
“We have a long list of unmet needs in this state, things that the General Assembly has promised over many years that we have not delivered on, so this is our opportunity to live up to what we have already promised,” Howell said.
Senate Democratic Caucus Chair Mamie Locke echoed those concerns in a statement after the presentation.
“Instead of fully funding mental health services, public education institutions, addressing the workforce shortage, and making housing and higher education more affordable, the Governor is proposing a budget that gives major corporations and the top 1% massive tax cuts at the expense of those who need it most,” Locke said.
This is a developing story. Check back for updates.