Virginia budget leaders reach compromise with governor on state spending plan

RICHMOND, Va. (AP) — Virginia budget negotiators and Gov. Glenn Youngkin have reached a compromise on the next two-year state spending plan that would include 3% raises for state employees and teachers while not raising taxes and risking a potential veto by Youngkin.

House Appropriations Chairman Luke Torian confirmed Thursday that the General Assembly’s budget leaders have reached a deal with Youngkin that they hope lawmakers will approve during a special session scheduled to begin on Monday.

Youngkin’s press secretary, Christian Martinez, said in a statement that Youngkin “looks forward to finishing the work to deliver on our collective priorities for all Virginians next week.”

Details of the new spending plan won’t be available to lawmakers or to the public until Saturday. Torian told the Richmond Times-Dispatch that the agreement includes additional state revenues to pay for Democratic spending priorities, including the raises for teachers and state employees, as well as money to restrain increases in tuition for state universities and colleges, help people with mental illness and pay for increased costs to Virginia’s Medicaid program.

“All of our spending priorities are intact,” Torian said.

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The $188 billion budget will not expand Virginia’s sales tax to digital services. Youngkin had originally proposed the idea as part of a tax policy package that would have cut tax revenues by $1 billion and plug what the governor called the “big tech loophole” that exempts video streaming and audio services from the tax levied on goods.

Democrats had rejected the governor’s proposals to cut income tax rates and raise the sales tax by almost a penny, but kept the expansion to digital services. Those tax provisions in the budget that lawmakers adopted on March 9 would have raised an additional $1 billion, but Youngkin said he would refuse to sign the budget, potentially leaving the state without money to operate on July 1 for the first time in Virginia history.

The agreement also does not include a requirement by the Democratic-controlled assembly that Virginia rejoin the Regional Greenhouse Gas Initiative, a multistate compact that seeks to reduce emissions of greenhouse gases that scientists say contribute to global warming and climate change. Youngkin pushed the State Air Pollution Control Board to withdraw the state from the compact because of concerns about the costs of surcharges on carbon pollution that consumers would pay in their electric bills.

Torian said the proposed budget deal does not include electronic skill games.

The VA Merchants and Amusement Coalition said hundreds of participating convenience stores will stop selling Virginia Lottery tickets until Youngkin and lawmakers “come to an agreement on a path forward for skill games.”

The compromise reached on Thursday would still have to pass review by members of the House and Senate, with Democrats holding a slim majority in each chamber.