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Youngkin signs Virginia budget offering tax reductions, major new spending

Virginia Mercury

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By Sarah Vogelsong

Gov. Glenn Youngkin signed long-delayed amendments to Virginia’s two-year budget on the steps of the state capitol Thursday, concluding a six-month process that has left many local and state agency initiatives in limbo.

“You waited a long time for this day — too long, candidly,” Youngkin said. “But we came together and got it done.”

Thanks to billions in surplus funds, the budget amendments negotiated by the Republican-controlled House and Democratic-controlled Senate offered both parties wins: almost $1 billion in tax reductions for Republicans, largely produced by one-time tax rebates, and major new investments in state programs for Democrats, with a reliance on one-time spending.

“When we put politics down and pick common sense up, look at what we can accomplish together,” said Youngkin Thursday in a speech that both disavowed politics and pointedly criticized Democratic policies and prior administrations — a combination that has become the governor’s signature.

“Right now we’re in the middle of change: change to the way Virginia operates, change to a culture of winning, and change to governing in a way that reflects real results. This represents the reawakening of that spirit of Virginia,” Youngkin said, using a phrase that he has adopted for his Spirit of Virginia PAC.

While Youngkin’s desire to institute long-term tax cuts has mostly been stymied by Democrats during his first 20 months in office, the governor on Thursday touted the state’s “historic” $5 billion in tax reductions over the past two budgets, an amount he said has produced $2,200 in tax relief to a typical Virginia family.

Much of that has or will come in the form of tax rebates, but the past two spending plans have also included major short-term changes to the standard deduction, which has nearly doubled from $4,500 to $8,500 for individuals and $9,000 to $17,000 for joint filers. The increases are scheduled to end in 2026.

Other investments highlighted by the governor Thursday included $200 million to help prepare sites for large-scale economic development projects, $653 million in new education spending, $170 million in behavioral health investments to further Youngkin’s “Right Help, Right Now” plan and $671 million in natural resources spending.

Sen. George Barker, D-Fairfax, one of the Democrats’ chief budget negotiators, said after the signing that many of the new investments were proposals from Senate Democrats, with some — like the extra 2% salary bump for teachers — supported by both parties in the legislature.

Youngkin was particularly supportive of mental health spending, said Barker, who recounted an episode where Senate negotiators told the governor they intended to push for major investments in the area. Youngkin last December had announced his own plan for $230 million to overhaul Virginia’s struggling behavioral health system.

“He said, to his credit, ‘I’m not going to object to anything you put in on mental health,’” Barker said.

Despite both Democrats and Republicans backing major behavioral health spending, the budget signed Thursday includes only $18 million for pay raises for staff at community services boards, the local agencies that provide community-based behavioral health and developmental disability services. Earlier proposals by the House and Senate would have put $37 million or $50 million, respectively, toward CSB staff raises.

“We did what we could,” Barker said. “We had to be able to fund a lot of different things.”

A December 2021 report by Virginia’s legislative watchdog agency found “uncompetitive salaries” were a key driver of high turnover and staffing problems at CSBs.

“More than 80 percent of CSB executive directors reported that compensation was one of the top three factors that made it difficult for their CSB to recruit and hire qualified staff for behavioral health services,” the report noted before recommending that the General Assembly provide regular salary increases for CSB staff who provide direct care to residents.

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