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As Youngkin arena deal crumbles, the state’s budget hangs in the balance

Governor Glenn Youngkin speaks at a news conference as Senators Louise Lucas and Mamie Locke watch from the background.
Brad Kutner
Radio IQ
Governor Glenn Youngkin speaks at a news conference as Senators Louise Lucas and Mamie Locke watch from the background.

Governor Glenn Youngkin’s hopes of a sports arena in northern Virginia may be dead, but politics in Virginia live on. Among deals that still need to happen between the Republican governor and his Democratic counterparts is the state’s budget.

In December, Governor Glenn Youngkin took to a stage in Alexandria to make a huge announcement.

"We will build a spectacular sports and entertainment district,” the governor said, announcing the $2 billion Monumental Sports & Entertainment complex bound for northern Virginia. It would have moved the Washington Capitals and Wizards to a new arena, funded with billions in taxpayer-backed bonds.

Democratic Senate Majority Leader Scott Surovell says Virginia has never used the state’s bond rating in such a way. And members of Senate leadership feared doing so now could open the door to more similarly funded projects, which Surovell believes carry unique risks.

“If you pile up multiple projects like this — five, 10, 15 projects that all have these kinds of bonds — if you have an economic downturn, it really puts your state’s credit rating at risk,” The Fairfax-area Senator said.

Surovell says he tried to work with the Youngkin administration to develop alternative funding models, but neither the governor nor the project’s private backer, billionaire Ted Leonsis, were interested.

Further complicating the deal was a lack of a union-backed construction contract.

Developer JBG SMITH failed to include unions in their pitch, losing labor support -and the support of many Democrats who had long touted the importance of unions in any stadium deal for Virginia. But that didn't stop the developer from delivering scathing remarks just days after the project's collapse.

"It is now clear that our efforts may have been complicated and ultimately blocked, in part, by special interests seeking to move the Monumental arena to Tysons Corner and to combine it with a casino," JBG SMITH CEO Matt Kelly said Thursday, referencing an alleged last-ditch effort to combine the project with a casino and move it to nearby Tysons Corner.

"JBG was given a simple assignment before session began: go work out an agreement with NOVA labor unions if you want to be part of the conversation," Surovell says. He says the massive reliance on taxpayers for a private project then workers needed to be well represented.

"JBG was unable to work out an agreement and now they're blaming everyone else," Surovell says. "They work out deals with unions in Maryland and DC. They shouldn't be pointing the finger at Senate Democrats."

That lack of negotiation may have caused the death of the arena project, but the state’s budget will require lawmakers to hash out their differences. Virginia is constitutionally obligated to agree on a balanced budget by July 1st of this year.

And demands from the people of Virginia are high. Public employee and teacher raises after years of inflation, toll relief for the 757-region, and billions for schools, mental health and healthcare are on the line.

Surovell says the Commonwealth has a history of bipartisan budgets. Former Governors Terry McAuliffe and Mark Warner — both Democrats — worked with GOP-controlled legislatures to keep the state open.

And the Senator is hopeful such an agreement will happen again this year.

“This arena project fell out of the sky as far as I’m concerned," Surovell said. "And we should be able to negotiate a budget with or without an arena.”

Youngkin now has a few weeks left to offer a counter budget proposal. All parties involved will return to Richmond to hammer out a final agreement on April 17th.

This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.

Brad Kutner is Radio IQ's reporter in Richmond.