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Gregory S. Schneider

RICHMOND — General Assembly negotiators and Gov. Glenn Youngkin (R) have reached a deal on the Virginia state budget, agreeing to use several hundred million dollars in excess state revenue to pay for spending priorities favored by the General Assembly without resorting to the tax expansion opposed by the governor.

“We have a budget!” House Appropriations Committee Chairman Luke E. Torian (D-Prince William) said Thursday afternoon after meetings between lawmakers and Youngkin. The full document will be made public Saturday morning and still has to be approved by the legislature in a special session next week.

“Governor Youngkin is grateful for all the members of the General Assembly, as well as the leadership and conferees for their ongoing efforts to deliver a budget,” Youngkin press secretary Christian Martinez said in a written statement. “He looks forward to finishing the work to deliver on our collective priorities for all Virginians next week.”

Because the deal was hammered out by a small group of negotiators called conferees, most of the 140 lawmakers in the General Assembly will have to be briefed on the budget agreement, said Senate Majority Leader Scott A. Surovell (D-Fairfax).

“This budget has significant changes from what we approved [earlier], and there’s 130 members that don’t know what’s in it,” he said.

Senate Finance and Appropriations Committee Chairwoman L. Louise Lucas (D-Portsmouth) did not immediately respond to a message seeking comment.

“I liked the [budget] we passed on the 9th of March, and while I understand that compromise had to be reached, I’m disappointed on a couple issues,” said Sen. R. Creigh Deeds (D-Charlottesville), a budget negotiator. He declined to elaborate, saying he first wanted to see the “fine print.”

In a win for Youngkin, the budget deal does not include the Democratic priority of renewing the state’s membership in the Regional Greenhouse Gas Initiative, a multistate compact for trading carbon emissions credits, according to two people familiar with the deal, who spoke on the condition of anonymity to release details before the bill is posted online.

A state regulatory board voted to withdraw Virginia from the group last year, fulfilling a <a href="https://www.washingtonpost.com/dc-md-va/2023/06/07/virginia-rggi-carbon-exit-youngkin/" target=_blank>directive from Youngkin</a>, who called the carbon offsets paid by utilities a “tax” that gets passed on to consumers. Environmental groups have filed suit against his action, and many Democrats feel strongly about participating.

Otherwise, the two-year spending plan features most of the same highlights as the one passed by the Democratic-controlled General Assembly when this year’s legislative session wrapped up March 9, Torian said, with 3 percent raises for teachers and state employees and big boosts in spending for K-12 and higher education.

But that plan paid for those increases partly by extending the state sales tax to digital downloads such as software and music that are exempt under existing law, and applying the tax to online purchases made by businesses as well as consumers. Youngkin had proposed the idea in December — calling it “closing the digital tax loophole” — but as part of a broader tax overhaul that included cuts to personal income taxes that lawmakers rejected.

Without the tax cuts, Youngkin proclaimed the General Assembly’s spending plan a “backward budget” and vowed never to sign it as long as it contained a tax increase. With the General Assembly also nixing Youngkin’s plan for a $2 billion arena in Alexandria to host the <a href="https://www.washingtonpost.com/dc-md-va/2024/03/20/virginia-youngkin-arena-lucas-wizards-capitals-budget/" target=_blank>Washington Wizards and Capitals</a>, lawmakers and the governor appeared to be at <a href="https://www.washingtonpost.com/dc-md-va/2024/04/06/virginia-budget-youngkin-veto-deadline/" target=_blank>complete loggerheads</a>, raising the prospect of an unprecedented shutdown of the Virginia government if no budget was passed by the end of the fiscal year, June 30.

When lawmakers returned to Richmond on April 17 for a one-day session to take up the governor’s amendments and vetoes, however, they announced a <a href="https://www.washingtonpost.com/dc-md-va/2024/04/17/virginia-budget-youngkin-assembly-deal/" target=_blank>breakthrough</a>: Democratic and Republican leaders had met with Youngkin, and all agreed to “lower the temperature” and find a compromise. They were spurred by the notion that Virginia’s coveted AAA bond rating could be tarnished by a shutdown, and enabled by new revenue reports that projected a big surplus in state tax collections.

After taking some time off, during which Youngkin made a trade trip to Europe last week, lawmakers and the governor met face-to-face Tuesday and then by conference call Thursday, once in the morning and once in the afternoon, Torian said.

“Everybody was on the same page,” he said. “The only reason we were doing the sales tax was to support our spending priorities, and with the revenue reports that have come in we have enough money to cover our spending priorities.”

The legislature’s joint committee on taxation will review the state’s tax policies with an eye toward a more sweeping overhaul next year, Torian said.

One major legislative item left out of the negotiations: a bill allowing slot-machine-like <a href="https://www.washingtonpost.com/dc-md-va/2024/03/18/skill-games-virginia-arena-bill-youngkin/" target=_blank>“skill games”</a> in convenience stores and other locations around the state. Youngkin had proposed amendments to that bill that supporters said rendered it almost pointless; lawmakers rejected those changes and sent the original bill back to the governor. He can either approve it or veto it; Torian said its fate was not discussed during budget talks.

“I think the clock has run out on any major legislation on that,” Surovell said.

Budget negotiators were hoping to post the proposed spending plan online Saturday, which would satisfy public-notice requirements for the bill to be voted on in a one-day special session Monday. The original plan was to present the budget Monday and have the legislature hold off on voting until Wednesday to meet the 48-hour requirement.

College of William & Mary, BA in English

Greg Schneider covers Virginia from the Richmond bureau. He was The Washington Post's business editor for more than seven years, and before that served stints as deputy business editor, national security editor and technology editor. He has also covered aviation security, the auto industry and the defense industry for The Post.

George Polk Award in 2014 for political reporting for investigation of relationship between Virginia governor and wealthy supporter

Trinity College, Hartford, Conn., BA in English Literature

Laura Vozzella covers Virginia politics for The Washington Post. Before joining The Post, she was a political columnist and food writer at the Baltimore Sun, and she has also worked for the Associated Press, the Fort Worth Star-Telegram and the Hartford Courant.

Laura Vozzella

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Virginia budget negotiators, Youngkin strike deal on spending plan

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