RICHMOND, Va. β Outgoing Governor Glenn Youngkin presented his final proposed two-year budget to lawmakers, including hundreds of millions in tax relief for Virginians and pay increases for state employees and teachers. With a month left in office, the $72 billion budget now faces scrutiny from incoming Governor-elect Abigail Spanberger and Democratic lawmakers.
"The net of it is a budget that's that is structurally sound, a budget that can carry Virginia into the future and keep her soaring," Youngkin said after his final budget proposal presentation to state lawmakers on Wednesday.
The budget includes $730 million in tax breaks for Virginians, with the bulk conforming to federal tax code changes passed over the summer that eliminate taxes on tips, overtime and car loan interest.
"We delay them for a year, and we cap them at 25% in year one and 50% in year two and ongoing," Youngkin said. "All of that enables us to substantially conform and yet provide some limitations on the overall dollar amount."
On the spending side, the budget includes over $6 billion in new investments, including $1 billion for a 2% bonus for teachers and state workers this fiscal year and a 2% raise each year of the budget.
"When we really delineate the achievements of the Commonwealth, it has been a massive transformation across all elements of the state," Youngkin said.
"And therefore, we have the capacity to provide a one-time bonus this year, which is 2%, and we should, we should pay them."
Youngkin says Virginia can make these investments because the Commonwealth is in a strong financial position and expected harsh impacts from the Trump administration have not materialized.
"We have record job growth, we have strong consumers that, while our federal government workers have been impacted, it has not been near the level that the doomsday guys thought it would be," Youngkin said.
However, Democratic lawmakers are skeptical of the proposal. Senate Majority Leader Scott Surovell says major changes are coming.
"I think you're going to see some major surgery done on this budget once we get our hands on it," Surovell said.
While Youngkin presented the budget, he won't be around to see it finished. He'll be replaced by Governor-elect Abigail Spanberger in January. She was in the room for the presentation and will have final say, along with Democrats in control of both chambers.
Surovell says Youngkin's budget is out of touch with the reality of challenges facing Virginians.
"Growth in our economy is not even at all," Surovell said. "The very well off, you make lots of money, you're doing OK. But the vast majority of people are not."
Surovell questions whether Virginia can afford to conform with federal tax breaks on tips and overtime, citing billions in new expenses for Medicaid costs, K-12 funding and federal cuts.
"They're raiding some one-time monies to pay for things in various places and that's not a structurally balanced budget," Surovell said.
Surovell says affordability will be the driving issue behind their work.
"Balancing the benefit of the budget and any pain that comes from policy changes in a fair way, so that people are doing well, I think need to pay their fair share," Surovell said.
Governor-elect Spanberger didn't speak with the media but released a statement saying the November election results showed Virginians want a focus on improving schools, lowering costs and creating good-paying jobs. She looks forward to working with the General Assembly.
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