Virginia has a budget, or more accurately, has finally amended the two-year budget that was adopted 14 months ago. Kudos to the budget conferees, many of whom will not be in the General Assembly when we convene next January. Nonetheless, they continued to invest their collective expertise and time to develop a budget compromise that could be supported nearly unanimously by both the House and the Senate. In Virginia, politicians do talk to one another, and genuinely strive for legislation that will improve the lives in our Commonwealth.
Virginia revenues continue to outperform expectations, rising 5% (adjusted for tax policy changes) in FY2023. This follows upon revenue growth of 15% and 16% in the preceding two years. The Commonwealth’s revenue has grown quicker than the treasure of the average citizen. Their representatives of either political party can agree that some of the tax growth should be returned, but it is the manner of distribution, the details, that caused the consternation and delays.
The approved budget includes a one-time tax rebate of $200 for individuals and $400 for joint filers, a slight increase in standard deduction (beginning next year), additional support for our military retirees, and reinstates the sales tax holiday (geared towards school supplies.) The spending priorities were historic investments in mental and behavioral health, COVID driven learning loss remediation, and additional compensation for our state and locally supported personnel.
The budget was adopted just in time for politicians of both stripes to create their TV commercials, radio spots, and mail pieces talking about our accomplishments in making Virginia more affordable and lowering our tax burden. By voting for the budget bill, we are technically accurate in our claims of accomplishment. But are we portraying the reality?
The just completed fiscal year recorded revenue growth of $3.04B compared to the originally adopted budget. The budget adjustments return about $140 million or 5% of that growth in ongoing tax reductions. The remaining growth was allocated roughly evenly between tax rebates, savings, and investments in personnel and programs summarized above.
It was no secret that during negotiations, Democrats (particularly Senate Democrats) did not favor permanent tax reductions, emphasizing instead increased spending for the Commonwealth. The Democrat approach is not inherently wrong any more than the Republican approach is correct. However, if we believe in a course of action, we should stand behind our beliefs, articulate accurately, and let the voters decide the best approach for the Commonwealth.
If our campaigns say we are for tax relief and making life in Virginia more affordable for our citizens, then we should have voted for Governor Glenn Youngkin’s individual tax legislation that would have permanently raised the standard deduction and lowered tax rates. This legislation did not get a single Democrat vote in the House or the Senate. If our campaigns say we want to make Virginia more competitive for business, then we should have voted for Governor Glenn Youngkin’s business tax legislation, which again, did not garner a single Democrat vote in the House or the Senate. If we say we are the party of education, then our campaigns should recognize that the K-12 general fund education budget has increased nearly 30% in the past two years under Governor Youngkin, easily eclipsing the 21% increase during the four-year Governor Ralph Northam administration.
Let us all be honest in campaigning for voters, and Virginia will be a better place.