Gov. Glenn Youngkin (R-VA) unveiled his proposed amendments to the two-year state budget on Thursday, which included spending $1 billion in tax breaks that would financially help Virginia residents by lowering state income taxes.
The governor claimed that if the legislature passed his proposals of lowering income and corporate taxes, the state would be in a position to assist residents struggling with inflation while also bringing in more outside businesses.
“This budget accounts for the reality of the looming economic storm,” Youngkin told members of the state’s Senate and General Assembly money committees. “It also accounts for the need to accelerate results and the fact that our state government’s financial condition has never been stronger.”
Youngkin proposed lowering the corporate tax rate from 6% to 5%. He also proposed cutting tax rates on the top income tax bracket from 5.75% to 5.5% if the state revenue meets its forecast. Virginia’s top income tax bracket currently starts at $17,001. Youngkin’s office estimated that the proposed cuts would save the average family of four people $578 a year, according to the Associated Press.
Youngkin also outlined some spending priorities in the proposal, including cleaning up the Chesapeake Bay, providing bonuses for teachers and law enforcement officers, wooing economic development, and rebuilding the state’s mental healthcare system. The plan does not include the total elimination of the state grocery tax, despite lowering it earlier this year.
The proposals will serve as a starting point for negotiations over the state budget when lawmakers reconvene in January but will need bipartisan support in order to pass. Democrats currently hold the General Assembly, while Republicans hold the Senate.
State Sen. Janet Howell (D) claimed that the tax cuts would be controversial but said the budget was a good starting point.
“We have a long list of unmet needs in the state, things that the General Assembly has promised over many years but we haven’t delivered on. So this is our opportunity to live up to what we’ve already promised,” Howell said, according to the Associated Press.
If passed, the cuts would be on top of a $4 billion tax reduction package that passed the General Assembly and was signed into law by Youngkin earlier this year. The proposals could also strengthen his reputation as a fiscal conservative were he to run for president in 2024. However, spending plans typically go through major changes by state lawmakers before being sent back to the governor for approval.