Tax Relief

Northam’s last funds proposal consists of tax breaks and wage will increase

RICHMOND, Virginia (AP) – Outgoing Democratic Governor of Virginia Ralph Northam on Thursday tabled a proposal for a biennial $ 158 billion state budget that would add to Virginia’s reserves, give teachers and other government employees pay rises, and a multitude of taxes would introduce cuts.

The spending plan Northam put before members of the legislature’s monetary committees is possible thanks to record sales growth that is expected to continue. The governor argued that his budget was progressive, financially responsible, and would install the new Republican governor, Glenn Youngkin, for success.

“We will continue to make the investments Virginia needs and we will continue to use resources to support Virginians who need them,” said Northam.

Northam, who, like all Virginia governors, has been banned from a second consecutive term, will step down in January.

Even an outgoing governor has to come up with a budget in December. Northam’s proposal for the 2022-2024 fiscal years could serve as a starting point for negotiations in the General Assembly, which will be under the shared control of Republicans and Democrats in January. But there’s practically no chance that the version the legislature sends to Youngkin will tie in with exactly what Northam brings in.

Northam spokeswoman Alena Yarmosky said Northam and Youngkin have met a few times since the November election but failed to discuss the details of the budget proposal, which had some overlap with Youngkin’s key campaign promises.

Youngkin, who attended the presentation, told reporters afterward that he believed Northam’s plan showed a continuation of “fundamental philosophical agreement” in some areas, such as the need for increases in salaries for teachers and law enforcement officers. But he said he would try to push the tax cuts further.

The Democrats’ plan includes a 5% pay increase for teachers in both fiscal years. Government employees would experience the same wage increases.

It also spends $ 223 million on law enforcement salaries increases to address both entry-level salaries and pay cut over time, and an additional $ 164 million on salary increases for direct caregivers in state mental health facilities, in for whom staffing has long been a challenge.

Northam’s proposal calls for tax adjustments of $ 2.1 billion, of which about $ 419 million would remain running.

He wants to abolish the state’s 1.5 percent share of sales tax on food. Northam campaigned on the matter in 2017, telling reporters Thursday that for the first time this year, Virginia was financially able to consider withdrawing the tax.

The abolition of the tax was a key campaign promise from Youngkin, who also called for a reduction in income taxes by doubling the standard withholding and lowering taxes on veterans’ retirement income.

Northam also suggests the state grant one-time economic growth tax breaks of $ 250 for individuals and $ 500 for married couples; recover up to 15% of the federal income tax credit for eligible families; and end accelerated sales tax payments for retailers.

His government said the tax break proposals should benefit lower-income workers who were disproportionately affected during the pandemic.

Northam’s proposal contains no significant new money for the troubled Virginia Employment Commission, Treasury Secretary K. Joseph Flores told reporters in a briefing.

This is despite the fact that the government has long claimed that the agency’s struggles, which have come out into the open amid a surge in pandemic-related claims, were partly due to underfunding. In the past, the agency was financed almost exclusively from federal funds.

Flores said the government believes previous rounds of state funding, including allocations from a special session earlier this year, were enough to resolve the issues.

Northam’s plan would provide $ 1.7 billion to the Commonwealth’s retained earnings, including a voluntary $ 564 million deposit over and above what is required. That would bring the reserves to more than $ 3.8 billion, 16.8% of the state’s revenue, according to documents provided to reporters.

Northam and other state officials have some flexibility in drawing up the new budget, as Virginia ended fiscal 2021 with $ 2.6 billion more in total than forecast. The Northam government says strong economic growth in fiscal years 2022, 2023 and 2024 will add an additional $ 13.4 billion in new general fund funding.

Northam’s plan would also: Invest $ 297 million in capital improvements, student benefits, and other needs in the state’s historically black colleges and universities; $ 165 million to help Richmond, Alexandria and Lynchburg develop sewer improvement systems to keep sewage out of streams and rivers; Grant $ 500 million to build and renovate schools for communities; and allocate nearly $ 1 billion to the public sector pension system.

In addition, $ 150 million would be invested in developing medium and large industrial development sites. A 2019 AP review found the state had already invested more than $ 100 million in land acquisition and development of a handful of such “megasites” that Virginia’s struggling rural south and southwest had little to show for. However, economic development officials say without operational websites the state will continue to miss opportunities for transformative economic development.

Northam had already announced many of its spending priorities Thursday during a “thank you” tour it launched earlier this month.

Several Republican lawmakers said Northam’s proposals reflected the priorities the GOP has advocated for years, while House Speaker Eileen Filler-Corn highlighted Virginia’s track record in under two years of democratic scrutiny.

Filler-Corn to become minority leader in the House of Representatives in January; Along with the raid of all three statewide offices in November, the GOP took back control of this chamber.

The leadership of the Democrat-controlled Senate did not comment on the proposal.

The General Assembly is called on January 12, and Youngkin is sworn in as the 74th governor of Virginia three days later.

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