The State Capitol. Photo by Markus Schmidt.

RICHMOND – Lawmakers are returning to Richmond Monday after being summoned last month for a special session by Gov. Glenn Youngkin to finalize the state’s biennial budget. But more than three weeks after the General Assembly adjourned its regular session on March 12, budget conferees have been unable to close the $3 billion gap that still separates the spending bills of both parties, with most disagreements relating to different versions of tax relief proposals.

“I don’t know where we are in regards to the budget,” Del. Terry Austin, R-Botetourt County, a member of the House Appropriations Committee and one of the budget negotiators, said in an interview Friday. “I haven’t been involved in any negotiations since the end of the regular session, if there have been any at all,” Austin said. While he expected some work to be done over the weekend, the requirement for the finalized budget to be made available for lawmakers to review it for 48 hours makes a vote Monday all but impossible.

Youngkin, who is hoping to make good on many of his campaign promises in particular relating to tax relief, wants to see his $5.5 billion package of proposed tax cuts that is still being weighed by the Democratic-controlled Senate to be approved sooner rather than later. 

“There are experienced legislators on both sides working through this and the governor’s expectation is that he is going to get a budget quickly, because that’s what Virginians deserve,” Youngkin spokeswoman Macaulay Porter said in an email. “It’s time for us to provide tax relief and move forward with the shared priorities of investing in education, law enforcement, and the mental health system.”

One of the key proposals at stake is legislation seeking to eliminate the 2.5% tax on groceries and essential personal hygiene products, which passed the House of Delegates by a 80-20 vote in February. The latter had been a staple during Youngkin’s bid for governor last year. In his own budget, outgoing Gov. Ralph Northam in December proposed slashing the state’s 1.5% portion of the grocery tax while retaining the 1% portion that benefits local governments to fund schools. 

But Republicans prefer House Bill 90, a measure sponsored by Del. Joe McNamara, R-Roanoke County, that would do away with the entire tax rate. To make up for the local allocation, McNamara has suggested using the state’s general fund to pay for local school construction, among other propositions. 

McNamara said in a phone interview Friday that he remains hopeful that budget negotiators will keep his measure intact. “I fully expect that the full and complete grocery tax will end up being eliminated in the budget,” he said. “Whether that happens next week I am not quite as confident about, but when both parties sit at the table and look at the revenue stream coming in, we should have a shared viewpoint that we shouldn’t be overtaxing our citizens. I think the lightbulb will eventually come on and we’ll end up with a solid budget.”

Youngkin is also pushing lawmakers to double Virginia’s standard reduction and offer tax rebates of $300 for individuals and $600 for married couples, and he is proposing a three-month gas tax holiday, suspending the state tax of 26.7 cents per gallon for gas and 27 cents per gallon for diesel fuel as Virginians struggle with climbing fuel prices. 

“Virginians overwhelmingly support repealing the grocery tax and doubling the standard deduction, and some other states have had success in suspending the gas tax,” said Sen. David Suetterlein, R-Roanoke County. 

Suetterlein said that on Monday the Senate and the House will reconvene to pass a set of ground rules for the special session. “It’s important that these ground rules are set up to ensure that the General Assembly will resolve these issues,” he said, adding that he hopes for considerations to be limited to the unresolved issues from the regular session while allowing the governor to send down bills on anything that might unexpectedly arise. “There is no expectation that a budget will be considered on Monday, but hopefully it will be very soon,” Suetterlein said.

Additional bills still being weighed by the budget conference is House Bill 563 by Del. Israel O’Quinn, R-Washington County, which would create a competitive matching grant fund and program that would provide up to $2 billion in bonds to help localities repair aging and crumbling schools, and a proposal that would make available $11.4 million in state funding for the victims of the major flood that destroyed dozens of homes in Buchanan County in August.

Also in limbo remains the fate of House Bill 105, sponsored by Del. Sam Rasoul, R-Roanoke, that would direct the Department of Behavioral Health and Developmental Services to study the feasibility of transforming Catawba Hospital into a state-of-the-art campus offering substance abuse treatment and addiction recovery passed with unanimous support in the House last month. While a Senate committee killed Rasoul’s measure, efforts to include $1 million for the study in the budget are still ongoing.

Rasoul said Friday that he expects it will take the better part of the month to develop a consensus on the budget. However, he also remains hopeful that a budget will be finalized long before the July 1 deadline.

“I think there is consensus on the grocery tax relief and rebate checks going back directly to taxpayers,” Rasoul said. “We do not have consensus on a gas tax holiday because it doesn’t guarantee that the consumers will actually see the benefits of that, and we want to make sure consumers are taken care off.”

Markus Schmidt

Markus Schmidt is a reporter for Cardinal News. Reach him at markus@cardinalnews.org.