Va. Dems propose $1B in rebates
Reallocation idea for 3 policies instead of governor’s car tax plan
By Kate Seltzer Staff writer
RICHMOND — The Virginia House and Senate money committees presented their versions of the proposed budget Sunday. Notably absent from either were Gov. Glenn Youngkin’s signature tax proposals, which would have provided a credit for people paying the car tax and eliminated the state tax on tips.
Instead, both chambers of the Democrat-controlled legislature are proposing to reallocate the $1.1 billion car tax credit toward a trio of other policies: a one-time income tax rebate, an increase in the standard deduction and an increase of the earned income tax credit.
“I said we had significant, one-time money,” said Sen. Louise Lucas, chair of the Senate Finance and Appropriations Committee, referring to Virginia’s budget surplus. “I promised that we would provide relief in a fiscally responsible way, and I have stayed true to my word.”
If the budget amendment passes, the tax rebate would be distributed in October and amount to $200 for single filers and $400 for joint filers. The standard deduction would increase to $8,750 for single filers and $17,500 for joint filers, an increase of $250 and $500, respectively. The refundability of the earned income tax credit would increase from 15 to 20% of the federal credit.
Legislation that would have codified the proposed car tax credit also died in a Senate committee. Republicans have called the car tax the most hated tax since the tax on tea; Democrats said the elimination of the tax is a no-go because localities depend on its funding.
In fiscal year 2024, the car tax generated $66 million in revenue for Newport News and $139 million for Virginia Beach. That funding goes toward things like education and community programs, and if the car tax was eliminated in Newport News, it would take the equivalent of approximately 30 cents on the real estate tax rate to make up for the financial hit, a spokesperson for the city said.Education funding
The House and Senate budget proposals include substantial increases in funding for education, about $400 million more than in direct aid to K-12 schools compared to Youngkin’s proposal.
That includes an additional $52.8 million for special education students and $222.9 million to fully remove the “support cap” that limited the number of support staff positions schools could hire. Much of that cap has been removed over the past few years.
“Last fall, the joint (education) subcommittee identified two primary funding priorities,” said Sen. Mamie Locke, D-Hampton, addressing the Senate Finance Committee Sunday. “The first was to address a cap that was placed on funding for support positions during the Great Recession. The second was to ensure resources to support special education.”
Both chambers voted to fund a one-time $1,000 bonus for teachers and support staff, on top of the 3% salary increase teachers are set to receive this year.
Youngkin’s initial proposal included $50 million for school vouchers for private and religious schools and $25 million for laboratory schools. Both of those provisions were eliminated in both chambers’ budget proposals.
Other differences
The House budget also includes provisions for a Prescription Drug Affordability Board. Youngkin vetoed legislation that would establish a PDAB last year.
Both chambers also eliminated language from Youngkin’s initial proposal that would withhold funding from so-called sanctuary cities, a term that generally refers to localities that in some way limit their cooperation with Immigrations and Customs Enforcement.
The House and Senate budget plans are adjustments from amendments the Republican governor proposed for Virginia’s existing two-year budget. The amendments will go to a conference committee to work out the differences between the two proposals later this week before the budget is presented to Youngkin.
Reporters Josh Janney and Stacy Parker contributed to this report.
Kate Seltzer, 757-713-7881, kate.seltzer@ virginiamedia.com