Bolling: Youngkin Budget Amendments – Good News/Bad News

Governor Glenn Youngkin has proposed amendments to the two-year $158 billion state budget that was introduced by Governor Ralph Northam in December. As with most things, Youngkin’s budget amendments are good news and bad news.

First, the good news. Youngkin has kept his campaign promises by proposing tax cuts for Virginia families and businesses. He has proposed:

* Doubling the standard deduction for state income tax filers at a cost of more than $2.1 billion in state revenues.

* Exempting up to $40,000 a year in military retirement benefits from the state income tax, phased in over three years, at a cost of $515 million.

* Increasing the amount of money given to taxpayers as one-time rebates by about $203 million when combined with similar tax relief that Northam proposed in his outgoing budget.

In total, Youngkin proposed $3.5 billion in budget amendments.

Now, the bad news. Youngkin did not propose any corresponding spending cuts to offset the loss in revenue that these tax cuts would create within the budget, as was the custom with Youngkin’s predecessors, including former Republican Governor Bob McDonnell.

In fact, during the McDonnell administration, we were specifically told by legislative leaders that the General Assembly would not recognize gubernatorial budget amendments that reduced revenue, unless those proposals were offset by corresponding spending cuts.

So, it is good that Youngkin has kept his campaign promise by proposing tax cuts, but none of these tax cuts will be possible unless the General Assembly adopts corresponding spending cuts to offset their impact on revenue or adjusts revenue projections (hopefully legitimately) to cover their cost.

Should Youngkin have proposed spending cuts to offset the revenue impact of these tax cut proposal? Yes. But we are obviously living in a brave, new political world where longstanding customs and rules have changed.