With just a little over one week left until the General Assembly adjourns its regular 2024 session, budget negotiators from the state Senate and the House of Delegates are set to meet Sunday for the first time to flesh out a compromise on the state’s next biennial budget.
While the two separate budgets that both chambers unveiled earlier this month denied Gov. Glenn Youngkin the $1 billion in additional tax relief and the proposed sales tax hike that he had asked for, both proposals include additional pay raises for state workers and teachers, and a major investment in K-12 schools, Medicaid and mental health services.
Although Democrats have been in control of the full legislature after flipping the House and retaining their majority in the Senate in the November election, a finalized state budget still has to win Youngkin’s approval before it is set to become law on July 1.
“There are some differences, we know what they are, and we are going to sit down and have a few conversations,” Del. Luke Torian, D-Prince William County, the chairman of the House Appropriations Committee, said in an interview Thursday.
Virginia’s legislature adopts a two-year budget every other year, and unlike the federal government, the commonwealth must remain funded to avert a detrimental impact not only on the state government but on localities that rely on cash from the state. The biennial budget is enacted into law in even-numbered years, and amendments to it are enacted in odd-numbered years.
Work on merging the chambers’ two competing budget bills begins in earnest once the budget conference committee is appointed. Members will resolve any differences between the amended budget versions passed by the two houses, resulting in a single enrolled bill, and will present it to the House and Senate, where it is voted on again before heading to the governor’s desk.
The Senate budget conferees announced this week are Sen. Louise Lucas, D-Portsmouth; Sen. Creigh Deeds, D-Charlottesville; Sen. Mamie Locke, D-Hampton; Sen. Jennifer Boysko, D-Fairfax County; Sen. Ryan McDougle, R-Hanover County; and Sen. Todd Pillion, R-Washington County.
Besides Torian, the House conferees are Del. Mark Sickles, D-Fairfax County; Del. David Bulova, D-Fairfax County; Del. Betsy Carr, D-Richmond; Del. Terry Austin, R-Botetourt County; and Del. Rob Bloxom, R-Accomack County.
In the two budget bills — SB 30 and HB 30 — Democrats gutted Youngkin’s plan to overhaul Virginia’s tax base. The governor had called for a 12% reduction of the income tax and a sales tax hike from 4.3% to 5.2% to offset the estimated annual revenue loss of $2.3 billion. But Democrats retained a provision in Youngkin’s budget that would close the so-called tech tax loophole on digital goods that are currently classified as tax-exempt services.
Instead of funding Youngkin’s tax reform plan, House Democrats propose to invest $2.56 billion in early childhood and K-12 education, including $1.02 billion directed to local school divisions to fund salaries and Standards of Quality modifications. The Senate proposal seeks an increase of $1.6 billion over the biennium in general fund support for K-12 and restores Literary Fund amounts to support school construction.
“K-12 is one of the big issues on our side, and I think that we all can appreciate that we are focusing on public education and higher ed, because we need to prepare our sons and daughters for college, and once they get there we need to prepare them for the workforce,” Torian said in the interview. “We all share that common interest, it’s just about determining how much money we want to spend.”
For Republicans — Youngkin included — the additional funding for public education is a major sticking point. “I think we are pretty far apart on education, and the House and Senate budget are pretty far apart there,” Austin, the delegate from Botetourt County, said in an interview Thursday.
Another contentious issue is legislation sponsored by Democrats that would regulate and tax skill games in Virginia. Youngkin’s office said last week that it has “serious concerns” about both versions of the legislation that lawmakers have put forward to legalize and tax the slots-like gambling devices found in gas stations and restaurants.
“We have lots of issues to deal with, and the problem is that some of those things are not going through their due process,” Austin said.
Virginia’s budget process is often slow-moving and at times excruciating. And unless all three branches of the state government are controlled by one party, it requires all stakeholders, elected or not, to work together and compromise.
Last year, the budget battle dragged on until September, when the legislature adopted a slate of amendments to the state’s biennial budget, including more than $1 billion in additional tax relief for Virginians as well as more funding for public education and mental health initiatives. Until then, Virginia had operated on the budget that was passed in the previous year.
In 2022, when the biennial budget for fiscal year 2022-24 was adopted, it took the conferees nearly three months of off-and-on negotiations to release their budget conference reports. The General Assembly approved the final budget four weeks before the deadline and almost three months after adjourning its regular session.
How long negotiations will take this year remains uncertain. “I just don’t know. I don’t think anyone knows at this point in time,” Austin said.
“The process can go very smoothly, if we get in the room and go to work and give it the time. Both sides work together very well, we respect each other and respect our positions, but we’ll have to compromise and find the middle ground, and that’s what we are doing.”