Gov. Glenn Youngkin outlined his policy agenda for “day two” of his new administration on Friday, and it looks a lot like “day one” — more tax cuts, especially for businesses; no additional government subsidies for affordable housing; and a “maniacal focus” on job creation.
Youngkin, speaking to the General Assembly Money Committees, said his new proposal to set aside $397 million in a new taxpayer relief fund is “a down payment” on tax cuts. additional taxes, beyond the $4 billion in cuts approved in budgets the legislature passed with bipartisan support in its first year.
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“Conventional wisdom doubted that we would be able to deliver and I suspect some people in this room doubted as well,” he told members of the Democratic-controlled Senate Appropriations and Finance Committee. House Appropriations and Finance Committees, with Republican majorities.
“So make no mistake: the budget we will present in December, and the one I intend to sign next year, will again include tax cuts,” he said.
Senate Finance Chair Janet Howell, D-Fairfax, welcomed the governor’s announcement of a $1.9 billion revenue surplus in the fiscal year that ended June 30, as well as continued growth in July, but urged caution on further tax cuts at the next General Assembly. meeting in January.
“It was basically very good news, but it’s probably premature to act so quickly,” Howell said after the speech.
The senior Democrat credited the Republican governor for “trying to work across party lines,” but Youngkin, who has followed two Democratic governors, also fired on “previous administrations” for allegedly lowering the academic standards of colleges. public schools and does too little to protect the Chesapeake Bay.
He also downplayed the value of the “Best State for Business” honor that CNBC bestowed on Virginia for two years under the then government. Ralph Northam, only to lower Virginia to third place this year, after North Carolina and Washington State.
“We’re less concerned with formula-driven rewards than actual results,” he said.
Youngkin, who began traveling outside of Virginia to raise his national political profile and support other Republican candidates, repeatedly attacked the federal government as the antithesis of state legislation.
He blamed federal policies – currently led by President Joe Biden and Democrats in Congress – for inflation hitting a 40-year high and threatening an economic downturn that he nevertheless does not expect to upend the economy of Virginia.
“For years, Washington has recklessly spent increasing federal debt year after year and racking up deficit after deficit. The feds have borrowed and printed, borrowed and printed…and now the sad truth is the bill is coming due,” the governor said.
Youngkin also blamed “too heavy and inefficient local governments” for driving up the cost of housing.
‘If we’re serious about the rising cost of living in the Commonwealth…then we’re going to have to get serious about the cost of where we live,’ he said. “The solution to this problem is not more grants or loan programs.”
“Instead, we need to address the root causes: unnecessary regulation, overburdened and ineffective local governments, restrictive zoning policies and an ideology of tooth and nail against all new development,” he added. .
The attack on affordable housing subsidies did not go down well with Democrats, who were quick to note the need for additional housing supports for people with disabilities and low incomes, including additional trust fund investments. for state affordable housing.
“I’ve always supported housing subsidies, for 35 years,” said Howell, who heads the Senate budget committee. “Unless someone comes up with a better idea, which they didn’t, we’re going to keep needing it.”
Even some Republican allies cringed at Youngkin’s criticism of local governments in Virginia, which set property tax rates and land-use and zoning policies.
“That’s not how I would characterize it,” said Senate Minority Leader Tommy Norment, R-James City, who served in local government before his election to the Senate 30 years ago. “Members of municipal councils and supervisory boards have the closest connection to the people they represent and the citizens they serve.”
Norment also cautioned Youngkin against the presidential ambitions he said previous governors of both parties had pursued during their only four-year terms as governor.
“I hope he will step up his focus on Commonwealth issues,” the Senate Republican leader said.
A number of recent Virginia governors have considered nominations for national office, but Doug Wilder is the only modern-day sitting governor to run for president. Wilder spent four months campaigning for the 1992 Democratic presidential nomination which went to Bill Clinton.
Youngkin, who warned in his speech against ‘degrading policing’, then renewed his criticism of US Attorney General Merrick Garland over the FBI’s raid on former President Donald Trump’s Florida home to retrieve files containing classified government information.
Youngkin argues the Justice Department wrongly sought to investigate parents who angrily approached school boards in Loudoun County and other locations, and failed to stop protests at court judges’ homes Supreme Court of the United States after the court’s draft opinion on restricting abortions became public.
“What we’re seeing from Attorney General Garland is a very inconsistent approach to the job,” Youngkin said. “That’s my main concern.”
The centerpiece of Youngkin’s ‘day two’ agenda for Virginia will likely remain tax cuts, an issue he used a year ago to reinvigorate his successful campaign against former Governor Terry. McAuliffe.
In an exclusive interview with the Richmond Times-Dispatch on Thursday, he previewed his plan to set aside nearly $400 million in excess revenue for a budget proposal in December that he hopes will go much further. .
“This is a down payment on what I really believe is a much larger package of tax cuts,” he said after Friday’s speech.
Those cuts will likely include cuts in corporate income taxes that he says are necessary for Virginia to more effectively compete with rival Southeast states, such as Tennessee, without personal income tax, and North Carolina.
“We absolutely need to reduce the cost of doing business in Virginia,” Youngkin told lawmakers. “For guidance on how to do this, we need look no further than North Carolina – a state that is consistently cutting its corporate taxes to attract more jobs and investment.”
Of the. Joe McNamara of R-Roanoke County, a House Finance member who has carried out the bulk of the governor’s tax-cutting program this year, said corporate tax cuts will be an important part of a proposed “multi-billion dollar” tax package. cuts in January.
“We need to look at corporate tax rates to be competitive with our peers,” McNamara said.
Norment said Youngkin would likely try again to cut state gasoline taxes — pointing to a big increase in the state’s transportation trust fund — but predicted he wouldn’t overcome the opposition from Senate Democrats, especially those in traffic-congested Northern Virginia.
Youngkin argues that the new two-year, $165 billion budget, which took effect July 1, includes plenty of money to allow for tax cuts and continued investment in its priorities — such as lab schools. that operate outside of traditional public school systems, law enforcement, and health behavior.
He said the state will have plenty of money for these priorities with a “record general fund balance.” He said the state ended the last fiscal year with a surplus of nearly $2 billion — a year after the state raised $2.6 billion in windfall revenue under Northam — and $1.2 billion in dollars of unspent funds that he did not specify.
The governor acknowledged that the budget agreement between the Republican-controlled House of Delegates and the Democratic-led Senate “anticipated a large portion of these funds”, devoting them to increasing financial reserves to a record 4 $.3 billion by mid-2024 and one-time investments in priorities such as retiring teachers and widening a section of Interstate 64 in New Kent County.
“It’s all positive, we have a lot of money,” said Sen. Emmett Hanger, R-Augusta, who voted with Democrats against Youngkin’s proposal to freeze the gas tax for three months. “We have to be careful, but we still have a lot of gaps to fill.”