With the fiscal legacy of Virginia's governor at stake, members of the General Assembly will gavel into session today.
At the top of the agenda this year is the budget, a legacy budget for Republican Governor Glenn Youngkin. This is his one and only shot of creating his own two-year budget from beginning to end. And he clearly wants his legacy to be cutting taxes. Here's the governor presenting his budget proposal to the money committees.
"We are cutting income taxes 12% across the board. Yes, 12% across the board," Youngkin said.
That's an applause line for Republicans. But Democrats are not applauding the governor's package of tax reform. They say they're not interested in shifting the burden away from the wealthiest one percent onto anyone with a Netflix subscription. Delegate Marcus Simon is a Democrat from Fairfax County who says it would be a mistake to give millionaires a tax break while adding a new digital services tax.
"They want to tax consumption and tax ordinary Virginians on the things that you purchase every day and at the same time they want to give a huge tax break that's worth far more than a couple of Netflix subscriptions like cutting the income tax," Simon says. "Which obviously disproportionately benefits the wealthiest of taxpayers in Virginia."
Although the governor is presenting the income tax cut and the new personal digital property tax as a package, incoming Senate Majority Leader Scott Surovell says members of the General Assembly will probably consider them separately.
"The income tax cut in exchange for a sales tax, whatever he wants to call it, is not going to happen," says Surovell. "I think that if we do anything on the sales tax, we'll modernize the sales tax and leave the income tax where it is."
The idea that Virginia should be taking a cut from your Spotify subscription or your download of Microsoft Word has been a topic of conversation for some time. Here's Delegate Vivian Watts, a Democrat from Fairfax County who will be the chairwoman of the House Finance Committee.
"Most states get significantly more from the sales tax because many, many states tax a variety of services, not just narrowly looking at only the digital age, but looking at that shift that the average family is spending two-to-one on services," says Watts.
That dramatic increase in consumption of services is an opportunity for revenue, and Virginia is hoping to cash in.
"It's simply a case of sales tax definitions not keeping up with emerging technology, and in this case, it's not even emerging," says Jared Walczak at the Tax Foundation. "We've had this technology for a long time, and sales taxes have simply been slow to respond."
Governor Youngkin is hoping his legacy might be a bit bigger than tax reform. Part of his budget picks up the slack from evaporating pandemic funds for childcare. Kim Bobo at the Virginia Interfaith Center for Public Policy says she agrees with the governor's priority, although she says the need may be even greater than anticipated.
"I think it's really how you calculate it in terms of how many people need it," Bobo says. "The governor says this well keep 27,000 kids on the program. The Virginia Promise Partnership believes there are 35,000 that could get cut off if we don't provide this kind of incentive."
Last year, negotiations dragged on well after the deadline, and many programs were not funded while Republicans and Democrats were deadlocked. This year, the governor is urging members of the General Assembly to finish on time in March.
This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.
