RICHMOND, Va. — Virginia lawmakers have finally reached an agreement on the state's budget, which reinstates the sales tax holiday and includes a one-time tax rebate and an increase to the standard tax deduction.
The news came in a joint press release Friday from Republican Del. Barry Knight, House Appropriations Committee Chair, Democratic Sen. Janet Howell, the Senate Finance and Appropriations Committee Chair, and her Co-Chair George Barker.
"While the negotiations have been deliberate and extended, we are very pleased that the outcome is both fair and balanced toward the priorities of the House and Senate. In an era when partisanship often prevails, the negotiations were cordial and respectful," the joint statement read, in part.
The House and Senate budget conferees reached a budget deal that provides tax relief in a few ways:
- a one-time tax rebate of $200 for individuals and $400 for joint filers
- an increase to the standard deduction ($8,500 for single filers and $17,000 for joint filers)
- removal of the age requirement for the military retiree subtraction
- The reinstatement of the sales tax holiday
The budget would also provide "unprecedented investments in education, natural resources, and behavioral health," according to the release.
House and Senate budget conferees and staff members will put the final touches on the budget "in the days to come," according to the release. And Howell indicated earlier this week that lawmakers will return to the state capitol in September for a vote.
The politically divided General Assembly ended its regular session in February without agreeing to a full spending plan after the GOP-controlled House and Democratic-controlled Senate passed legislation with competing priorities, including sharp differences on tax policy versus spending on government services.
Gov. Glenn Youngkin and House Republicans, pointing to the state's multibillion-dollar surplus, have been arguing for an additional $1 billion in tax cuts beyond the approximately $4 billion Youngkin signed into law last year. Democrats, who control the state Senate, called the Republican-backed cuts that included a proposed corporate tax rate reduction a giveaway to big business at the expense of public schools and other priorities.
Closed-door negotiations between House and Senate representatives have plodded since the Assembly adjourned in late February, with proposals and counterproposals occasionally shuttled back and forth.
Because the state operates on a two-year budget, with the plan initially adopted in even-numbered years and amended in odd-numbered years, the impasse hasn’t stopped the state government from functioning, even though the new fiscal year started July 1. There’s already a budget in place, passed in 2022, and this legislation would revise it.
But lawmakers have faced criticism for not moving more quickly on one of their most important responsibilities. School districts, local governments and a wide range of advocacy and special interest groups have been closely watching for progress.
GOP House Speaker Todd Gilbert said in a statement that the development was “encouraging" and that discussions about when lawmakers might convene for a potential special session to consider the compromise legislation would take place over the coming week.
“We’re closer than ever before to providing real tax relief to Virginia families who are being squeezed by inflation and other skyrocketing costs, and providing historic levels of support for our schools," Gilbert said.
The budget negotiators said earlier this week, when they told reporters they were close to a final product, that a special session would likely take place in September.
Macaulay Porter, a spokeswoman for Republican Gov. Glenn Youngkin, said in a statement that the governor would review the final details when they are released, adding: “Virginians welcome the news that the conferees have come to an agreement on a framework that builds on the governor’s work to deliver historic investments in education and mental health while providing significant tax relief which will reduce the cost of living in the Commonwealth.”
The Associated Press contributed to this report.