Dear <<First Name>>:
Late last week, the Virginia House of Delegates and State Senate each passed its own versions of the biennial state budget.
Before describing the contents of the budget and my positions on them, let me share some background on how these two bills originated.
The budget we voted on last week was initially prepared by Democratic Governor Ralph Northam during his last days in office when both chambers were still controlled by Democrats. But by the time the budget bill was introduced in the General Assembly, the House of Delegates had switched party control.
Thus, when Republican Governor Glenn Youngkin was sworn in, he coordinated with the Republican House leadership to dramatically change Governor Northam’s budget to reflect their campaign promises.
At the same time, though, the State Senate continues to remain under Democratic control, which means that the Senate’s version of the budget is much closer to the version drafted by the former governor of the same party.
As explained in more detail below, I opposed the House budget because it included severe cuts to many of my priorities, including education, social services, and environmental protections.
To be sure, there were some positive items in the budget, such as eliminating sales taxes on grocery and essential personal products. But these same good policies are contained in the Senate budget as well, so I look forward to supporting the Senate version when it comes to the House.
House Bill 30 provides $161 billion to pay for state government programs during fiscal years 2022 through 2024.
This is a record amount for our state’s biennial budget. The roughly $10 billion in excess revenues are partly from funds that Virginia received through federal COVID assistance and increases in income and other taxes.
The prudent leadership of Governor Northam and the Democratic legislature during the pandemic allowed the Commonwealth to manage the public health and economic crises without causing undue burdens on our state’s resources.
We applied federal emergency funding for healthcare workers, protective equipment, unemployment payments, assistance to schools and businesses, supporting broadband expansion, and keeping the state’s economy steady.
The fiscally responsible policies we adopted during this time also resulted in historic amounts put away in the state’s Rainy Day fund and the larger than anticipated surplus.
Predictably, as soon as they took over, Governor Youngkin and Republicans in the House wanted to give away these additional revenues as tax cuts.
Democrats, meanwhile, want to apply these unprecedented revenues to support core government services that were traditionally underfunded.
Tax Policy Reforms
Thus, one of the biggest differences in the budgets passed by the House and Senate is on taxes: the Republican version cuts taxes by $5.5 billion while the Democrats include about $2.5 billion.
Among the Republican tax plans is eliminating the 2.5% statewide sales tax on groceries and essential personal care products, while providing funds directly to reimburse local governments that would lose the 1% percent portion they now receive from this sales tax.
As I described in an earlier email to you, I introduced a bill this year to eliminate the sales tax on essential personal hygiene products, including menstrual products.
This is an issue I have worked on for five years, and I am proud to see this finally becoming reality in Virginia. My House Bill 696 was incorporated into a Republican bill, HB 90, which is the authorizing legislation that implements this tax cut in the House budget bill.
While I strongly supported this tax cut, I was unable to support other tax reform plans included in the Republican House budget.
One issue I disagreed with strongly is with the House budget’s treatment of the Earned Income Tax Credit (EITC).
EITC is a successful federal tax program that has assisted low-income families since 1975. This tax credit reduces the amount of federal income tax owed and is “refundable” meaning that a tax filer can take the full credit even if their tax liability is smaller than the amount of the credit.
EITC and the child tax credit work together to reduce the poverty rate of working-age families better than any other government program.
Virginia is one of 30 states that have a state version of EITC, but we are among five states that make them non-refundable. Currently Virginia offers qualified families either a $300 tax credit or a non-refundable 20% of the federal EITC.
But because our state EITC is not refundable, most families who qualify for the credit do not receive the full amount. If it were to be made even partially refundable, it could provide immediate tax relief to about 600,000 of the most vulnerable working families in Virginia.
In his introduced budget, Governor Northam proposed making our EITC partially refundable. In the House budget, the Republicans stripped out this provision and replaced it with doubling of the standard deduction for tax filers.
Allowing tax filers to claim more in standard deductions ($9,000 for singles and $18,000 for married) certainly helps some Virginians, but it would end up providing tax relief to even the wealthiest families while not assisting those at the lowest income level.
This change would also cost the state $2.1 billion in the biennial budget permanently unless the deductions were to change in the future.
The House Republican budget also repeals a 5-cent-per-gallon gasoline tax for one year, which currently funds crucial transportation projects in Northern Virginia.
It also provides taxpayers with a one-time rebate of $300 per individual and $600 per couple, which is a tired political gimmick that Republican presidents like George W. Bush and Donald Trump have employed to seek publicity.
Education and Social Services
In addition to these tax policies with which I disagreed, the House Republican budget cut significant funding for education and social services.
For example, while the total amounts for schools in both budgets are historic, the Senate version provides $500 million more per year, including a 5% pay raise for teachers, and additional funds to hire teachers for English Language Learners.
The Senate version also includes a guaranteed source of funds to pay for school construction, more generous need-based financial aid for public college students, and funds for the “G3” free community college program which I helped create through legislation last year.
One of my priorities this year was to ensure that our state government provided language access for new Virginians and others who are not native English speakers.
Working with my fellow Asian American legislators, we secured over $11 million in the Senate budget to help state agencies facilitate and improve language access. The House budget includes only $6.1 million for this much needed program.
Similarly, the Virginia Asian American and Pacific Islander Caucus successfully sought $8 million in the Senate budget for funding for a pilot program that competitively awards grants to immigrant- and refugee-serving organizations to provide intensive case management.
Unfortunately, the House budget does not include any funds for these “Navigator” programs.
In the areas of environment and climate change, the House budget includes a poison pill that I simply could not swallow. It removes Virginia from the Regional Greenhouse Gas Initiative (RGGI) which we joined last year.
RGGI is a major effort to combat climate change, and the revenues generated from the polluting industries is already supporting local efforts to mitigate coastal flooding and separately, is assisting low-income Virginians with their heating costs.
The Senate budget keeps RGGI in place, which is what Virginia should be doing.
Finally, the Republicans slipped into the massive budget bill a paragraph that undoes an important environmental protection effort that I helped deliver a couple of years ago.
In a bipartisan effort to restrict non-biodegradable trash, Virginia recently passed a law to ban restaurants from giving food to customers in single-use containers made of expanded polystyrene.
Under this new law, some national chain restaurants would be required to stop using these containers by July 1, 2023, and other restaurants must be in compliance by July 1, 2025.
To my surprise, we found a provision in the budget that would push back the compliance of this new law by five years, with a requirement for a study to be conducted in the interim.
I took to the House Floor to raise my objection to this provision and called out the bad faith among some parties who seem to be undermining the compromise we struck in previous legislative sessions.
This sneaky attempt to undo bipartisan, bicameral legislation is an example of the worst aspects of politics, and I wanted to shine the light on this egregious practice.
To read more about the budget, click here. I will keep you updated on the progress of the negotiations between the two chambers as the legislature heads toward adjournment in a couple of weeks.
In the meantime, please do not hesitate to contact me with your questions or comments. My office can be reached at DelMKeam@house.virginia.gov or call (703) 350-3911 or (804) 698-1035.