Just four days before lawmakers are set to return to Richmond for a special session to consider a new state budget, the General Assembly’s budget negotiators and Gov. Glenn Youngkin struck a deal Thursday afternoon for a two-year spending plan that, if approved by the legislature next week, would avert a government shutdown by July 1.
Del. Terry Austin, R-Botetourt County and a budget conferee who was part of the negotiations, called the agreement a win for both sides.
“The Democrats accomplished their objectives with the recognition of their needs for the commonwealth, and we did that through revenues on hand and some bonding that met that need and did not place a new burden of taxation on the citizens,” Austin said in a phone interview.
While the entire budget will not be made public until Saturday morning, Austin confirmed that Democrats agreed to scrap their plans for new tax increases, including an expansion of the sales tax to cover all digital goods and services.
Language in the budget that would have required Virginia’s renewed participation in the Regional Greenhouse Gas Initiative, or RGGI, was also removed.
In return, Youngkin will not get the additional $1 billion in tax relief that he had pushed for when he rolled out his original budget proposal in December. At the time, he wanted a 12% reduction of all income taxes, with a top rate of 5.1%.
To offset the estimated annual revenue loss of $2.3 billion, he proposed increasing the state’s sales tax rate from 4.3% to 5.2% — a move that he rescinded when Democrats kept the new tax on digital goods but eliminated the income tax cuts in their budget.
If approved by the General Assembly on Monday, the new $188 billion budget for fiscal years 2024-26 would end a monthslong stalemate between the administration and Democrats that began in early March, when the governor rejected the conference report that the Democratic-controlled legislature approved by a bipartisan 62-37 vote.
“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 spokesman Christian Martinez said in a statement. “He looks forward to finishing the work to deliver on our collective priorities for all Virginians next week.”