LONG-OVERDUE TAX RELIEF
The compromise agreed upon Wednesday provides approximately $4 billion in tax cuts overall. The House had supported $5 Billion in cuts, vs only $2 Billion from the Senate, so we didn't get everything we wanted, but got most of it. Here are a few of the notable tax provisions:
Elimination of the 1.5% state sales tax on groceries and essential personal hygiene products beginning January 1, 2023 (while maintaining the 1% local option). The House of Delegates previously voted for Del. McNamara's legislation that fully repeals the grocery tax on July 1, 2022, and I hope Governor Youngkin will send the General Assembly amendments to do just that.
Provides an individual income tax subtraction to veterans over 55 years old for up to $10,000 of military benefits in Taxable Year 2022, up to $20,000 in Taxable Year 2023, up to $30,000 in Taxable Year 2024, and up to $40,000 in Taxable Year 2025 and each taxable year thereafter.
Increased standard deduction from $4,500 to $8,000 for individuals and $9,000 to $16,000 for joint filers (a 78% increase).
A one-time tax rebate of up to $250 for individuals and $500 for married couples, which would be mailed (or direct deposited) sometime after July 1.
Although the increase in the standard deduction failed to meet Governor Youngkin’s request to double it, this is a major win for working families this tax year that should save families on average $575 this year.
While the tax cuts are welcomed, Virginians should not ignore the massive growth of this budget when compared to previous budgets. The total revenue from both general fund and non-general fund sources is about $166 billion over two years, which is a 17.5% increase over the last biennium budget and almost a 41% increase over 2018’s budget.
The budget includes pay increases for teachers, and for state and state-supported local employees (like sheriffs’ deputies). They will receive a 5% increase, plus another 5% next year, which will help them with rising cost of living under Bidenflation.
The gas tax holiday asked for by the Governor is not in the budget, so I am hopeful that the Governor’s amendments will include relief there.
You can read more in-depth discussion of the tax cuts and analysis by the Thomas Jefferson Institute in the Jefferson Policy Journal here.
There is also a summary presentation of all the key changes and provisions in the budget prepared by House Appropriations Committee staff.
LIMITS ON EXECUTIVE ORDERS
Governor Youngkin signed SB 4 and HB 158 last week, which limit the duration of emergency executive actions to 45 days unless approved by both the Virginia Senate and House of Delegates. Under Gov. Northam, Virginia experienced emergency actions with the force of law for nearly 19 months. This is a rare example of Democrats and Republicans working together with Gov. Youngkin to help restore checks and balances. My HB 777 would have gone further to protect fundamental rights, so I will continue working on this area in the future.
SCHOOLS AND SCHOOL CHOICE
The budget compromise allocates $100 million for university-run, publicly funded K-12 lab schools. Lab schools would be legally defined as public schools and, per the compromise, could be run by public higher education institutions that offer bachelor’s degrees. The plan is two-thirds of the governor’s original proposal, which was a request for $150 million in lab school funding.
The budget allocates $45 million over the biennium in additional funding for the School Resource Officer Incentive Grant Program (No local match required in the first year)
LOCAL INTEREST BUDGET AND LEGISLATION ITEMS