RICHMOND, Va. — Virginia’s Democratic-controlled Senate and House of Delegates held a spirited debate Thursday over proposed changes to the state’s two-year budget, setting the stage for future negotiations on a final spending plan. The amendments, which would modify the final year of the 2024-2026 budget, reflect the priorities of each chamber while challenging Governor Glenn Youngkin’s revisions.
Tax Relief Proposals
One of the most contentious areas of discussion was tax relief. Both the Senate and House of Delegates agreed on proposals to issue one-time rebates to individual taxpayers. Under the proposed amendments, individual income tax filers would receive $200, while joint filers would receive $400, with payments expected by October. Additionally, lawmakers in both chambers backed a proposal to make the refundable earned income tax credit 20% of the federal credit.
The amendments also include extensions and increases on standard deductions for the next two years. These changes aim to provide financial relief to Virginians, particularly in light of rising costs and economic uncertainty.
However, the amendments represent a direct challenge to Governor Youngkin’s original budget proposal. Youngkin had suggested a more targeted tax relief plan that would have introduced a permanent, refundable income tax credit for low- and middle-income earners. The Governor’s plan included up to $150 for individuals earning under $50,000 a year, and $300 for joint filers making under $100,000 annually.
In a move that drew sharp criticism from Republicans, Democrats redirected the car tax relief proposal, arguing that their broader rebate plan would provide immediate financial relief to Virginians, regardless of income or occupation. The Senate and House amendments also removed Youngkin’s proposal to cut taxes on tips, with Democrats defending their approach as a fairer option for the majority of workers.
Del. Eric Zehr, a Republican, criticized the Democratic amendments, claiming they would take money away from lower- and middle-income workers while disproportionately benefiting wealthier residents. In contrast, Democratic Del. David Bulova defended the broader rebates, pointing out that workers who don’t receive tips, such as those in manual labor or service jobs, would benefit from the relief.
Education and Teacher Funding
Education funding was another major issue debated in both chambers. In line with their push to redirect funds from Youngkin’s budget priorities, Democrats sought to eliminate the Governor’s proposal for a $50 million funding initiative aimed at private education vouchers, or “opportunity scholarships.” Last year, Youngkin’s administration introduced a new accountability system to measure school performance across the state, but amendments in the Senate’s budget would delay the implementation of that system.
Both chambers also proposed one-time $1,000 bonuses for teachers and school support staff, part of a broader effort to address compensation for educators. Additionally, lawmakers allocated $223 million to end a 15-year cap on state funding for school support positions, responding to long-standing concerns about underfunded roles that are crucial to the functioning of Virginia’s education system.
Medicaid Funding and Federal Match Concerns
While both the Senate and House amended the budget to address various issues, neither chamber tackled the potential impact of changes in federal Medicaid funding. Virginia’s Medicaid expansion could be jeopardized by a reduction in federal funding, and the state’s trigger law could swiftly end Medicaid coverage if the match rate drops. The situation remains uncertain after the White House paused federal grants and loans, including Medicaid, before a federal judge blocked the directive.
Skill Games and Gaming Regulation
Another notable distinction between the two chambers’ proposals is their approach to “skill games,” the slot-like betting machines that had become increasingly popular in businesses such as truck stops and convenience stores. The Senate passed an amendment to tax and regulate these games, which had previously been banned following a surge in popularity.
Meanwhile, the House of Delegates left the issue of skill games aside in its budget proposal, after Governor Youngkin vetoed related legislation last year. Instead, the House proposed the creation of a Virginia Gaming Commission to oversee all forms of gaming in the state, including casinos, sports betting, and the Lottery.
Next Steps
With both the House and Senate having passed their respective amendments, the next step is a conference committee, where a small group of lawmakers will work behind closed doors to reconcile differences between the two chambers’ plans. Once an agreement is reached, the final budget will be sent to Governor Youngkin for consideration.
As Virginia’s lawmakers continue to navigate this year’s budget debate, the stakes remain high for the state’s economy, education system, and the financial well-being of its residents. With tax relief proposals and funding priorities on the table, the outcome of this negotiation will have far-reaching implications for Virginians in the coming years.
