Virginia’s two-year budget cycle includes a change to make adjustments depending on the gust of economic winds. Based on Governor Glenn Youngkin’s budget amendments Wednesday morning, the breeze is strong.
“With shared credit for all of us, to say simply, my friends, Virginia is roaring,” the Republican governor told his legislative counterparts in the House and Senate. Both chambers are controlled by Democrats.
The collaborative tone comes as Virginia has billions in extra funds. Spending priorities have trickled out both from his administration and from Democrats, but Wednesday was the first look at his full proposal.
The most headline-grabbing effort is undoubtedly the state’s car tax, a revenue source worth billions that localities rely on for much of their budgets.
“I think we can take a big step to make a down payment to provide car tax relief. That’s why the working-class car tax credit is a big step,” Youngkin said.
The idea requires $1.1 billion to offer a rebate to single payers or families making less than $50,000 or $100,000 respectively. That’s enough of a down payment to cover the rebate for three years. The governor hopes whoever is in charge then will continue the rebate or eliminate the car tax entirely.
That income threshold may put relief out of reach for lower income Virginians in the Commonwealth's wealthier DC suburbs, But Youngkin has a plan for that too: a cap on the ability of localities to increase the car tax.
“The car tax has become a piggy bank that the localities have been going to repeatedly after repeatedly after repeatedly,” he told reporters. “And that’s why it's so hated.”
House Appropriations Committee chair Luke Torian noted he and his compatriots had only just seen the governor’s final proposal and it would take time to digest.
“If it makes sense then it makes sense, and we’ll deal with it. If it does not, we’ll have a conversation in that regard,” Torian said.
Notably he didn’t have much to say about Youngkin’s $1.1 billion ask for car tax relief, nor was he aware of any large tax cut proposals coming from his chamber either. But he did note Youngkin’s budget likely didn’t meet Democrats' demand for more education funding.
“[I’m a] little disappointed that we are not doing as much as I think we can do for our teachers because of the surplus,” Torian said. “It's all about how we appropriate the resources in the long term.”
Senate Majority leader Scott Surovell was less impressed by Youngkin's car tax pitch. He called it a “public school defunding zombie gimmick” that was rejected in the 90s. He told Radio IQ in a text message that the governor should support a $15/hour minimum wage if he “wants to actually help hard working Virginians.”
“Apparently the governor is proud that Virginia funds are public school students at 20% less per student than West Virginia,” he added, pointing to calls from his party to drastically increase Virginia’s education spending.
Senate President Louise Lucas said she'd consider Youngkin's amendments but that her chamber's budget would "look different."
"The senate budget will provide relief to working families and individuals and invest in their education and well-being," Lucas said in a statement. "Here in the Senate, we look beyond elections and talk-show appearances and budget for the long-haul."
Other notable budget asks from Youngkin include a ban on so-called “sanctuary cities,” localities that Youngkin says fail to properly work with Immigration and Customs Enforcement officials when an undocumented person leaves police custody.
He also plans to take more than $100 million in funds reserved for the Regional Greenhouse Gas Initiative and spend it on rebuilding and recovery efforts in Southwest Virginia after Hurricane Helene.
It’s an idea environmental groups are still parsing out. RGGI funds are supposed to be spent on climate resiliency or energy conservation improvements. Those close to the issue were uncomfortable speaking on record, but they hinted at being open to Youngkin’s request if the funds were spent to rebuild in a climate-resilient manner.
Youngkin said his budget amendments were arguably conservative and in line with what his administration had and has forecast for the Commonwealth’s financials for years. That caution started before President-elect Donald Trump’s promise of new tariffs and the termination or relocation of thousands of federal employees that could see a dent in northern Virginia’s tax base.
“[20]26, 27, there may be some lean years, and I think we’re prepared well,” Torian said of his party's view on Trump’s threats. “If the economy slows down, we want to be able to spend the money we have now.”
Youngkin, meanwhile, was more optimistic. When asked about future tariffs, he said Trump would use them to get America “good deals.”
“What I am seeing as a result of the discussion around tariffs is literally a line of businesses that want to invest in America, and particularly in Virginia,” he said.
Youngkin’s presentation Wednesday sets the stage ahead of the 2025 legislative session. It’s a shorter session which means larger bills aren’t usually addressed.
This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.
