Gov. Glenn Youngkin and General Assembly leaders are starting with a clean slate in an effort to reach a new state budget, avoid a potential government shutdown and buy time to determine how much new revenue they will have to spend over the next two years.
Youngkin and assembly leaders of both parties gathered in the state Capitol around Houdon’s statue of George Washington on Wednesday afternoon to declare a working truce in their ongoing battle over taxes and spending. They have been at odds over the $188 billion two-year budget that the Democratic-controlled legislature adopted last month and the Republican governor tried unsuccessfully to amend this week.
An hour earlier, the House of Delegates voted unanimously to set aside the record 242 amendments the governor had proposed to the budget bills the assembly had adopted on March 9 for the fiscal year that ends June 30 and for the two fiscal years that start July 1.
People are also reading…
The House delayed any action on the bills until a special legislative session that Youngkin said he and the assembly agreed to call on May 13 for a vote on May 15. The dates are meant to allow time for negotiation and potential compromise on a $1 billion sales tax expansion that Youngkin had promised to block.
“We’re committed to start working,” the governor told news media in the Capitol Rotunda, shortly after meeting with legislative leaders at his office in the building.
After an often rancorous 60-day session ended with Youngkin thwarted in his top priorities, legislative leaders visited the governor in the House Appropriations Committee conference room on Tuesday afternoon to begin talking about their differences. They met again on Wednesday morning, hours before the assembly reconvened to consider the governor’s proposed amendments to the budget and more than 150 other bills, as well as a record 153 legislative vetoes.
The House sustained all the governor’s vetoes. Democrats hold a 21-19 edge in the Senate and a 51-49 edge in the House, which meant it was unlikely lawmakers would muster the two-thirds vote to override a veto.
As for the budget: “The House, the Senate and the governor all got in a room together and we had a conversation,” House Appropriations Chairman Luke Torian said Wednesday after the House set aside the governor’s proposed amendments to the current budget and the next two-year spending plan.
“Everybody came to the table because everybody realizes the budget is essential to the commonwealth and the localities,” Torian said.
Lawmakers and Youngkin will now work to fashion a budget agreement in order to prevent a government shutdown when the fiscal year ends on June 30.
“Can I sing kumbaya?” Speaker Don Scott, D-Portsmouth told the Richmond Times-Dispatch.
The turning point came over lunch on Monday in a conversation between Senate Finance Chair Louise Lucas, D-Portsmouth, and Senate Minority Leader Ryan McDougle, R-Hanover, who has been calling for tempers to cool and for Youngkin and assembly leaders to start having face-to-face conversations. Youngkin met with Lucas later that day, setting the stage for meetings on Tuesday and Wednesday in Torian’s conference room.
Lucas, who has proved a formidable political adversary for the Republican governor, said, “The thing that changed was a lot of collaboration. Nothing helps the process more than bringing people around the table.”
Youngkin said the political tone changed because “we spent time together.”
Lucas added: “A lot of time together.”
The shift in political mood was evident in the 100-0 House vote that the governor’s budget amendments did not meet the constitutional standard of being “specific and severable” from the entire $188 billion two-year spending plan. After that, the House voted to pass by for the day a vote on the budget, effectively putting the budget bill on ice.
House Minority Leader Todd Gilbert. R-Shenandoah, urged his fellow Republicans to vote to kill the governor’s amendments.
“We have to find a way to dispatch this bill so we can do the things that need to be done” to reach agreement on a budget, Gilbert said.
Revenue will be key
The key to reaching an agreement that does not cross Youngkin’s red line of not increasing taxes depends on how much revenue Virginia collects in the fiscal year’s final quarter, which began on April 1. State income tax payments are due on May 1, so the governor and assembly budget leaders are waiting for a clearer picture of how much new revenue will be available when the fiscal year ends on June 30.
Youngkin reported on Tuesday afternoon that revenues were running almost $400 million ahead of forecast in the first nine months of the fiscal year — and potentially $1 billion — depending on highly unpredictable estimated and final income tax payments by sole proprietors and investors whose taxes are not withheld from their paychecks.
The governor said he had met with assembly budget leaders to talk about the increasingly optimistic revenue outlook, based on a 5% increase in revenues in March compared with the same month last year and 6.2% gain in the first nine months of the fiscal year.
With Virginia reliant on tax collections in the final three months of the fiscal year to pay for its current budget obligations, Youngkin said, “There’s still risk there. We recognize that.”
Gilbert, a former House speaker before Democrats regained a majority in legislative elections last fall, said, “The détente that we hope we made, that may be looming” is coming even though “there has been posturing on both sides.”
An agreement won’t happen in a day, he said.
“We understand there are legitimate priorities on the other side of the aisle ... the governor doesn’t want to reach farther into Virginians’ pockets,” but there may be ways to accomplish both, he said.
Some bitterness lingered over Youngkin’s unprecedented attempt to rewrite the budget and veto Democratic legislative priorities.
Del. Sam Rasoul, D-Roanoke, addressing his remarks to Scott as speaker of the House, said: “This is not the way we do things, Mr. Speaker, if we’re really going to try to find common ground.”
Torian, standing next to Youngkin, made clear that the House has not yielded to the governor on anything in the pending budgets. That includes the legislature’s proposed expansion of the state sales tax to digital services. The governor initially made that proposal as part of his package to cut taxes by $1 billion. He then vowed to veto the provision when Democratic leaders included it without offsetting tax cuts.
“Nothing is off the table,” the budget chairman said. “Everything will be up for discussion and determination.”
However, Torian was optimistic in an interview immediately after the budget vote.
“We’re pretty close,” he said. “There are some things we have to iron out, but we’re close.”
Del. Nick Freitas, R-Culpeper, said it will not be easy, but lawmakers are determined.
“We have a very, very difficult budget compromise going forward,” he said. “We have to get some sort of budget.