Gov. Youngkin says legislators made ‘colossal mistake’ by leaving arena out of budget

The state’s two-year spending plan that General Assembly budget negotiators unveiled on Thursday includes more than $2.5 billion in new funding for K-12 public education, a 3% salary increase over the biennium for teachers and state employees, an additional $2.5 million for the proposed inland port in Washington County and $70 million in one-time general fund support to accelerate the Interstate 81 northbound lane widening project.

But the budget does not include what Gov. Glenn Youngkin hopes to be the legacy project of his tenure: the proposed $2 billion sports arena in Alexandria that would bring the NBA’s Washington Wizards and NHL’s Washington Capitals to Virginia at the expense of Virginia taxpayers.

Speaking to reporters during a press conference outside the state Capitol on Thursday afternoon, a visibly upset Youngkin said that Senate Democrats, who had blocked his plan from even being considered, were about to make “a colossal mistake” by denying the commonwealth what opponents of the project have dubbed the Glenn-Dome. 

“The Senate refused to give the single largest economic development deal in Virginia’s history any serious meaningful consideration, breaking their own longstanding tradition in the process, and avoiding the broad bipartisan support in both houses,” Youngkin said. 

Youngkin and businessman Ted Leonsis, the owner of the two sports teams, announced in December that they had agreed on a deal to relocate the Capitals and Wizards from Washington, D.C., to the Potomac Yard section of Alexandria. The 9 million-square-foot development would include an arena, practice facility, a separate performing arts venue and the corporate headquarters for Monumental Sports & Entertainment, the company founded and helmed by Leonsis.

Under the agreement, about $500 million for the project would be funded by Monumental and the city of Alexandria, and $1.5 billion would be financed through bonds issued by a governmental entity created for this purpose, backed by Virginia taxpayers. 

A failed arena deal would cast aside “30,000 jobs and the $12 billion in new revenue that would flow not only to all the areas of the commonwealth, but based on the fact that we were going to do something that is truly transformative,” Youngkin said Thursday. 

While the House of Delegates had voted 81-18 in favor of a budget that included the arena deal, the proposal was never taken up by the powerful Senate Finance and Appropriations Committee, chaired by Sen. Louise Lucas, D-Portsmouth, who has been dead-set against the plan.

Lucas remained unconvinced even after Youngkin signaled in a message to lawmakers last week that the revenue generated by the arena could be “a dedicated, long-term funding stream for key shared priorities, including toll relief, education funding for disadvantaged rural and urban areas, and funding for Interstate 81 improvements.” 

Standing on the nearby Capitol steps and looking over Youngkin’s shoulders as he spoke, Lucas chuckled when the governor suggested that she — without naming her — was acting as a “single roadblock” standing in the way of a successful arena deal. 

“I am a roadblock, yeah,” Lucas said in a brief interview. “The reason why this is necessary is because I do not believe that we need to put the full faith and credit of the commonwealth behind a project that is going to further enrich billionaires. If they want this project, pay for it.”

Lucas defended her decision to dig in even after the budget passed out of the House included funding for the arena, and over the objections from some of her Democratic colleagues in the Senate who are supporting the project. 

“I don’t do this all the time, but it is a prerogative of the chair, and when I feel strongly that what I’m doing is in the best interest of the voters in the commonwealth of Virginia I will put 10 toes down and stand with the voters,” Lucas said in the interview. “I believe that it is in the best interest of the commonwealth not to bring that arena on the back of the taxpayers of Virginia. If they really believe that this is a good project, tell them to hold a referendum.”

For much of Thursday morning, Capitol Square was abuzz with anticipation for the release of the finalized budget two days before the General Assembly is set to adjourn its regular 2024 session. But lawmakers were unusually tight-lipped and unwilling to speculate or discuss details until the agreement was formalized. 

When the legislature adjourned two years ago, it did so without a budget deal and with about 50 bills still lingering in conference. At the time, Democrats controlled the Senate but Republicans still held a majority in the House of Delegates, and both chambers passed a resolution allowing them to approve conference committee reports on bills — including the budget — in a subsequent special session.

Lawmakers then returned to Richmond in April that year after Youngkin called for a special session ringing in the legislature’s second attempt at completing the state’s biennial budget, which it eventually approved on June 1. 

With Democrats in charge of the entire legislature this year, they expedited the process to have a budget finalized and posted for 48 hours before it goes before the entire body for a vote on Saturday, allowing legislators to return to their home districts later that day. 

About an hour before Youngkin’s press conference on Thursday, Del. Luke Torian, D-Prince William County, the chairman of the House Appropriations Committee, told reporters in the Capitol rotunda that he thought the conferees had done “a pretty good job” at finalizing the budget. 

Torian, who had carried the Youngkin’s arena bill in the House, conceded that it was “maybe perhaps a little disappointing” that the proposal did not make it into the finalized budget. “But that’s the nature of trying to govern here in the commonwealth and trying to get a budget out in time. And we put forward the very best effort to do so, we just had some differences at this point,” Torian said. 

Sen. Scott Surovell, D-Fairfax County, the Senate majority leader and sponsor of the Senate’s version of the arena legislation, also said he was disappointed that Lucas never allowed for his proposal to be taken up in her committee. 

“Traditionally in the Senate, when a senator files a bill, the bill is docketed, debated and voted on,” Surovell said in an interview Thursday. “Senator Lucas and I had a longstanding disagreement about that last year, there were a couple of bills that she didn’t want to docket. It didn’t happen this time, and that’s a little different than things usually work around here.”

Surovell said that there was room for negotiations in his arena proposal that could have addressed some of Lucas’ concerns with the legislation. 

“I thought there were some concessions that could have been made and some more discussions we needed to have about the underlying economics of the project, but we didn’t have those validated,” he said. 

“We also need to have some more discussions about how the project could be financed and try to figure out if there is a different way to accomplish that with less risk to taxpayers. But I think the project still has merit, and that’s something we should talk about.”

With his arena project now on life support, Youngkin has few remaining options to force a vote on the proposal, Surovell said. “I expect to see this come back in the form of a budget amendment, or the governor might raise it in a special session,” he said. 

Surovell added that he hopes Youngkin won’t retaliate against Democrats for Lucas’ hard stance on the arena by vetoing some of the party’s signature legislation they sent to his desk in the past few weeks, including a minimum wage hike and the creation of an adult-use cannabis retail market in the commonwealth. 

“We have to rise above the pettiness and personal vendettas in this business or else we wouldn’t get a whole lot of anything done,” Surovell said. “Politics is a contact sport, and we’re here fighting over how to distribute $40 billion amongst eight million people. Things get heated and you have to rise above it, and if he can’t rise above it, that would be disappointing.”

While Youngkin didn’t directly say on Thursday that he would use his veto powers to undermine the Democrats’ agenda, he urged the legislature to “do what’s right” and come through with a deal for the arena. 

“I think this may be the single best opportunity that I have ever seen, and it just befuddles me that we’re not spending today talking about how to deliver it, and instead I’m here trying to convince our General Assembly to do what’s right,” Youngkin said. “They know they can fix this. But fixing it starts with embracing the opportunity and recognizing that it truly can change so much of the commonwealth’s future.”