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‘Buckle up’: Youngkin budget proposal includes another $1B in tax cuts

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By Graham Moomaw

Gov. Glenn Youngkin rolled out a budget plan Thursday that includes $1 billion in tax cuts for Virginia residents and businesses, telling the General Assembly to “buckle up” because his administration wants the state to “start going faster and getting more done.”

Building on roughly $4 billion in tax cuts included in a bipartisan budget deal earlier this year, Youngkin said he wants to lower the state’s top individual income tax rate from 5.75% to 5.5%, a change with a $333 million impact. Because the highest income bracket covers all taxable income over $17,000, the top rate applies to the vast majority of Virginia earners.

The governor also suggested cutting the state’s corporate income tax rate from 6% to 5%, which would lower revenues by roughly $362 million over the two-year budget cycle. Youngkin said he’d like to get the rate even lower, possibly to 4% by the end of his administration.

Making it cheaper for people and businesses to be in Virginia, Youngkin told the legislature’s money committees, will boost Virginia’s position as it competes with other states for talent and economic investment.

“We can grow our way to lower tax rates,” Youngkin said. “We can keep Virginians here, including our veterans. We can attract people from other states, and fuel the economic engine that will drive it all even faster. And we must get started now.”

Democrats called the budget plan a good starting point for negotiations that will begin in earnest next month when the General Assembly begins the 2023 legislative session. But Sen. Janet Howell, D-Fairfax, the co-chair of the Senate Finance Committee, said Youngkin’s tax cuts are sure to be “very controversial.”

“We have a long list of unmet needs in this state, things that the General Assembly has promised over many years that we haven’t delivered on,” Howell told reporters after the governor’s presentation.

Youngkin said his latest tax-cutting proposal can be funded by the $3.6 billion in excess revenue the state is forecasting for the current fiscal year. To hedge against the possibility of a recession, the Youngkin administration noted its plan includes safeguards to stop roughly $1 billion of budget items, including the proposed cut to the individual income tax rate, if the fiscal forecast worsens and it starts to look like the state can’t afford it.

“Despite the current economic uncertainty, the Commonwealth of Virginia is really in an extraordinary position,” said Finance Secretary Stephen Cummings, adding Virginia can do the “both/and” of lowering taxes and increasing spending on key priorities.

Other tax cuts in the proposal include $162.1 million in relief targeted to small businesses through the qualified business income deduction, $94.9 million for another increase in the state’s standard income tax deduction and $37.8 million to lift an age limit on tax-free military retirement benefits for veterans.

“Taxes are still too high in Virginia,” Youngkin said.

Democratic lawmakers, who secured some major tax concessions from Republicans earlier this year while voting for some of Youngkin’s tax proposals, seemed particularly skeptical of Youngkin’s call to cut the corporate income tax rate.

“We’re 27th in the nation. Square in the middle,” said Del. Vivian Watts, D-Fairfax, who said she hasn’t heard complaints that Virginia’s corporate tax rate is particularly high or burdensome.

In response to Watts, Cummings said the rate “does make a difference” to companies making location decisions.

“It does not feel like there’s a strategy and a message about what we’re trying to achieve with our tax structure,” Cummings said.

Youngkin’s proposal sets the stage for budget negotiations that will unfold when lawmakers return to Richmond on Jan. 11 for the start of the next session.

Here’s a few other major proposals in Youngkin’s plan:

Bonuses for teachers and state employees

The proposal doesn’t include across-the-board raises for public workers, but teachers and state employees would get one-time bonuses.

Full-time state employees would receive $1,500 bonuses effective Dec. 1 of next year, and high performers would be eligible for extra bonus pay worth up to 10% of their salary. The merit bonuses would be based on employees’ most recent performance evaluations. Combined, the bonuses for state employees would cost roughly $200 million.

Similarly, the budget includes $50 million for merit-based bonuses for teachers. Eligibility for the $5,000 payments would be determined “by the Department of Education in conjunction with local school divisions,” according to budget documents.

Another $45 million would cover the state’s share of one-time retention bonuses for instructional and support staff.

Site readiness

Virginia’s lack of large-scale building sites ripe and ready for industrial development has been a regular talking point of the administration, which says it’s one of the biggest factors leading the state to lose deals to competitors like Tennessee, North Carolina and Georgia.

The biggest spending priority of the budget proposal, site development would receive an additional $450 million over the next two years to grow Virginia’s inventory of project-ready sites. The second-year allocation of $250 million would be contingent on state revenues meeting expectations, a mechanism intended to provide Virginia some flexibility in the event of a recession.

“The opportunity cost of inaction is clear, and it’s alarming,” Youngkin said. “Since 2016, Virginia was eliminated on projects that represented more than 55,000 direct jobs and $124 billion in capital investment for one reason: sites.”

Among those were four major semiconductor and four major automotive projects that the Virginia Economic Development Partnership has said would have generated 33,200 direct jobs and over $1.9 billion in capital spending.

Resilient Virginia Revolving Loan Fund

The second-largest spending item in Youngkin’s budget proposal is the deposit of $200 million over the next two years into the state’s newly created Resilient Virginia Revolving Loan Fund.

Set up by the General Assembly during the 2022 session, the revolving loan fund was envisioned as a more flexible tool for channeling money to Virginians facing flooding than the Community Flood Preparedness Fund, which issues grants for community resilience projects but not to individual private landowners.

The revolving fund was seeded with $25 million this year, drawn from money Virginia took in from its participation in the Regional Greenhouse Gas Initiative, a 12-state carbon market. By law, 45% of Virginia’s RGGI proceeds flow to the Community Flood Preparedness Fund, which previously was the only dedicated source of state money for flood resilience.

With Youngkin moving to withdraw Virginia from the market, however, local governments facing increasing pressures from flooding linked to climate change have worried about the loss of the revenue stream. Capitalized with an additional $200 million — half of which is contingent on the state meeting revenue forecasts — the revolving loan fund could provide an alternative source of flood preparedness dollars, albeit one reliant on loans rather than grants and with greater uncertainty about long-term cash flow.

“This $200 million appropriation will allow the Resilient Virginia Revolving Loan Fund to serve as a true revolving fund that is able to serve as a sustained source for resilience needs,” Youngkin spokeswoman Macaulay Porter said in an email.

Youngkin proposes $230 million behavioral health overhaul

Education

Besides teacher bonuses, new education spending will include an additional $50 million for laboratory schools, the K-12 academies developed in partnership with colleges and universities that are the closest Youngkin has gotten to fulfilling his pledge to foster school choice in Virginia. The budget signed by the governor this past June included $100 million for the schools.

Pointing to steep learning losses among students during the COVID-19 pandemic, Youngkin is also proposing $7.2 million for K-8 math specialists in low-performing schools and $16.9 million to provide a reading specialist for every 550 students in grades four and five beginning in the 2023-24 school year. An additional $21 million would go to the Virginia Community College System to expand its dual enrollment program.

“By the time I leave office, I want us to have a plan to graduate every single high school senior in the commonwealth of Virginia with an industry-recognized credential,” said Youngkin.

And, with teacher shortages continuing to loom, the governor is floating $10 million in incentive payments for “teachers hired to fill instructional positions in hard-to-fill positions or hard-to-staff schools between July and September 2023.”

Commanders

Oh, and by the way, there’s this: $500,000 for the Secretary of Finance to “evaluate potential economic incentives related to the potential relocation of the Washington Commanders to the Commonwealth of Virginia.”

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Community

Storm the Gates with Art 180, All City Art Club, and Supply.RVA

Bridging the divide between street art and gallery spaces with street signs, black book works, graffiti pieces, and creative public art activities.

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Art 180, All City Art Club, and Supply.RVA is bringing you their first exhibition of 2023, Storm the Gates, a gallery takeover celebrating graffiti artists, illustrators, cartoonists, and people painting in the corner of their bedrooms and garages. Bridging the divide between street art and gallery spaces with street signs, black book works, graffiti pieces, and creative public art activities.

Join them this Friday during February @rvafirstfridays where they’ll unveil a mural collaboratively painted by All City Art Club and ART 180’s program alumni and current participants.

Friday, February 3
5-9 p.m.
ART 180’s Atlas Gallery
114 W Marshall St.

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Business

Greater Richmond Convention Center marks 20 years serving region

Since 2003, the complex has hosted a total of 7,034 conventions, consumer shows, sports tournaments, and other events, bringing millions of people and dollars to the region.

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Virginia’s largest meeting and exhibition venue celebrates two decades of welcoming events and visitors to the Richmond Region this year. The Greater Richmond Convention Center officially opened on February 28, 2003, as cheerleaders from across the country flipped in the American National Cheer and Dance Championships in the building’s exhibit hall.

Since then, the GRCC has hosted a total of 7,034 conventions, consumer shows, sports tournaments and other events bringing millions of people and dollars to the region.

The GRCC replaced the 62,000-square-foot Richmond Center, which opened in 1986. Stretching across a six-block area, the 700,000 square-foot GRCC incorporates some of the steel and pillars from the original facility.

Construction for the project began in 1999 and was supported by a $10 million investment from former Governor George Allen and the regionwide transient lodging tax.

“It is the best example of regional cooperation in the history of this whole area,” said late Lt. Gov. John H. Hager during a 2002 press conference.

The Greater Richmond Convention Center Authority – a political subdivision of Virginia with representation from the city of Richmond, Chesterfield, Hanover and Henrico counties – oversaw the financing, development and construction of the GRCC. The Authority’s 25th anniversary is this year.

We’re immensely proud of the legacy and the positive impact the Greater Richmond Convention Center has had on tourism,” said Lincoln Saunders, City of Richmond Chief Administrative Officer and Chair of the Greater Richmond Convention Center Authority. “Millions of people are introduced to the Richmond Region through events and competitions that are hosted at the facility every year. These visitors support our economy by shopping at our small businesses, eating at restaurants and visiting attractions.”

To examine the viability of the GRCC, regional leaders commissioned a feasibility study by C.H. Johnson Consulting in 1999. The researchers projected hotel tax collections to reach $30 million by fiscal year 2020. Hotel tax collection revenues reached $30 million by fiscal year 2019.

Throughout the GRCC expansion phases, groups were welcomed to the region to use completed portions of the building. About 1,200 women from the Delta Sigma Theta Sorority were the first to use the facility’s new ballroom during a three-day conference in May 2001.

When the GRCC was officially completed in 2003, Richmond Region Tourism had booked 18 conventions through 2008.

Interest and bookings have experienced a dramatic uptick over the years. During its last fiscal year, the GRCC hosted over 180 events.

From USA Fencing tournaments and ice dancing competitions to offshore wind conferences and comic conventions, the GRCC has hosted various large-scale events since it opened.

“The convention center is a shining example of regional collaboration,” said Jack Berry, president and CEO of Richmond Region Tourism. “The success of the convention center demonstrates how investing in tourism results in positive economic development for our entire region. Richmond Region Tourism and its partners are committed to working alongside our community to continue tourism’s positive momentum.”

The GRCC went through extensive upgrades to modernize the facility in 2020.

GRCC’s technological and cosmetic improvements include new LED lighting and RGB color lighting, monitors, digital signage, and a new digital sound system.  Its interior spaces were updated with new tile, accents, paint scheme, and pub-style tables and seating. The facility also features a new executive lounge and a renovated food court and service desk.

Today the GRCC features 178,159 square feet of contiguous exhibit space, a 30,550 square foot grand ballroom, and 50,000 sq. ft. of additional meeting room space.

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Downtown

Animal welfare advocates disappointed bill to declaw cats failed

House Bill 1382 would have made the declawing of cats a $500 civil penalty for the first violation, $1,000 for the second violation and $2,500 for the third or any subsequent violation. The bill failed to advance when it was tabled by a 6-4 vote in a House Agriculture, Chesapeake and Natural Resources subcommittee.

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By Cassandra Loper

A proposal to outlaw the declawing of cats, a procedure that animal rights advocates call cruel and unnecessary, failed to advance from a House subcommittee last month.

House Bill 1382 would have made cat declawing a $500 civil penalty for the first violation, $1,000 for the second violation and $2,500 for the third or any subsequent violation. The bill was tabled by a 6-4 vote in a House Agriculture, Chesapeake and Natural Resources subcommittee.

The bill is important because cats’ claws are natural and used for stretching, marking territory, balance and more, according to Molly Armus, Virginia state director of the Humane Society of the United States.

Declawing cats is actually an “incredibly painful procedure,” according to Armus.

“I think it’s up to us, as people who are taking these cats into our homes, to learn more humane and less invasive ways to manage scratching,” Armus said.

An onychectomy, or declawing, is a surgery that includes 10 separate amputations, according to People for the Ethical Treatment of Animals, or PETA. PETA is the largest animal rights organization in the world, according to its website.

Declawing is typically performed for convenience, according to the Animal League Defense Fund. Many people declaw their cats to prevent scratching, its website states.

“Localities around the nation, a couple of states, including our neighbor Maryland, have passed a declawing ban,” said bill sponsor Del. Gwendolyn Gooditis, D-Clarke, in the committee meeting.

New York and Maryland are the only U.S. states that have outlawed declawing. Multiple U.S. cities have passed declawing laws, with the most located in California, according to PETA.

“Declawing cats means, look at your hands, it would be the equivalent of your fingers and your toes being chopped off at the first knuckle,” Gooditis said.

The procedure can cause impaired balance, as much as a person would after losing his or her toes, according to PETA. Declawed cats may have to relearn how to walk.

“It’s a removal of that last bone,” Gooditis said.

Susan Seward, a lobbyist for the Virginia Veterinary Medical Association, or VVMA, testified against the bill in the committee meeting. The VVMA strongly opposed the bill, Seward said.

“I think one of the unintended consequences would be setting up a really unpleasant and adversarial relationship between animal control and veterinarians, and that is certainly not a relationship we want to diminish,” Seward said to the committee panel.

Alice Burton, program director for nonprofit animal welfare organization Alley Cat Allies, said the organization was disappointed the bill failed.

Alley Cat Allies mission is to protect and improve the lives of cats. according to its website. The organization operates a trap-neuter-return program to help stabilize the cat population. A cat is transported to a veterinarian, spayed and returned to its original location.

It’s an act of cruelty to declaw cats, according to Burton, who was an animal control officer for 15 years.

“They no longer have their nails as a defense, so their first instinct is to bite,” Burton said. “So all of a sudden they’ve got these bites on their record, which obviously does not bode well for them.”

Declawed cats also struggle to use the litter box because the litter hurts their paws, she said. Many cats who have been declawed will stop using the litter box and soil where they aren’t supposed to, Burton said.

“I would say most of the time these negative effects lead to these cats being surrendered to the shelters or rescue groups,” Burton said. “They would, in most cases, be deemed unadoptable and they would be euthanized.”

There are many other humane options out there, according to Burton.

Humane alternatives to declawing include trimming a cat’s claws regularly, using deterrents such as double-sided tape on furniture, rubber caps for the nails and providing a variety of scratching options, according to Alley Cat Allies.

“We’re not giving up,” Burton said. “We’re going to come back and keep fighting.”

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We need your help. RVAHub is a small, independent publication, and we depend on our readers to help us provide a vital community service. If you enjoy our content, would you consider a donation as small as $5? We would be immensely grateful! Interested in advertising your business, organization, or event? Get the details here.

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