Virginia has adopted a two-year budget, albeit over 100 days late. With just one day remaining to adopt local budgets, our localities scrambled to adjust their budgets based on commonwealth funding. Meanwhile, our Virginia budget leaders announced that they had reached a bipartisan consensus and were offering a good budget for Virginia. But in reality, was the delayed budget good for Virginia? Let’s take a look.
First, the budget was remarkable not only because of the delayed adoption but also because of the quantity of significant legislation produced by the budget. Every year, there are budget items that have not been debated during our 45 or 60 days (that become law as a result of the budget document), but this year was exceptional. With virtually no discussion through the committee structure, the budget negotiators (or more correctly, one Senate Democrat, one House Democrat and the Democratic governor) created a new industry tax, which will generate $1.2 billion over the biennium. Shouldn’t a tax policy change of this significance have the benefit of careful committee evaluation, stakeholder input and review of the full General Assembly?
The budget also created a legal cannabis market. While the cannabis issue has been discussed for multiple sessions, the 2026 legislation presented to the governor was vetoed just five weeks earlier. In the governor’s veto statement, she stated:
“I veto House Bill 642, which would set up a retail marketplace for cannabis products in the Commonwealth of Virginia without the timeline, structure, or resources to be successfully implemented. … I greatly appreciate the patrons’ time crafting this important piece of legislation as well as our continued dialogue and collaboration to strengthen this framework ahead of the next legislative session.”
But alas, the final budget document contained legalization of cannabis. Were the governor’s veto statement concerns addressed, or was the desired cannabis-related tax revenues the dominant driver for budget negotiators?
Second, the budget was remarkable based on the growth of government spending. The general fund in the budget increased by $3.3 billion in FY2027 from the FY2026 budget adopted under Gov. Glenn Youngkin just 14 months earlier. This represents a 10.5% increase, or an additional $9 million every day to support the commonwealth’s activities. Even adjusting for population growth, the adopted budget grows the government by more than twice the rate of inflation. I wonder how many of us received a 10.5% increase in pay this year, because our government did.
The budget allows for localities across the state to hold a referendum to increase our Virginia sales tax by 1%, with the proceeds directed to local governments. Depending on where you live in the commonwealth, your current Virginia sales tax is between 5.3% and 7%. Expect to see that rate grow to between 6.3% and 8%. When you add up to 10% for meals tax (as has Bristol, VA), all of a sudden, the rotisserie chicken you picked up from Food Lion includes up to 16.3% tax at check-out. Does this provision make Virginia more affordable?
Further, the budget creates a massive new social program that is jointly funded by employers and employees. While well-intentioned, the paid time off program is projected to cost employers and employees $2 billion per year and be administered by a new government bureaucracy employing more than 350 people. Further, increases to the program’s underlying payroll tax can occur without legislative oversight. This does not make Virginia more affordable.
Third, and perhaps most shocking, was the legislature’s decision to nearly triple their pay. While an argument can be made that after 40 years (at the same pay) some increase is justified, should that increase be 180%? Especially in light of the delayed budget adoption and the difficulty Virginians are having paying their own bills!
Let there be no doubt, by just evaluating the above areas, we are rapidly increasing the cost of our government. So sure, the budget has many good programs, but in the totality, it is growing the government in an unsustainable manner.
Politicians of all stripes and service levels can’t seem to say no to new programs. Whether at the local, state or national levels, total government spending has been growing faster than inflation for all but one year during the past decade. While Virginia has been recognized for its business-friendly culture and reasonable tax structure, I am afraid that this year’s spending plan is the beginning of the end for that recognition.
Delegate Joe McNamara represents all of Salem and portions of Roanoke city and Roanoke County. He is a Republican.
