Virginia special session on budget scheduled for April 4

(The Center Square) – Virginia lawmakers will return to Richmond on April 4 for a special session to finish work on the state budget, tax policy, funding to construct an NFL stadium and other bills that weren’t completed during the regular session.

“Between high gas prices and rising inflation, Virginians are more squeezed than ever and the General Assembly can deliver much needed tax relief to struggling Virginia families,” Gov. Glenn Youngkin said in a statement. “Together, we can produce the biggest tax cut in the history of the Commonwealth at a time when Virginians need it the most and also make record investments in our education, law enforcement and behavioral health system, among other important priorities. Let’s get back to work.”

The House of Delegates, which is narrowly controlled by Republicans, and the Senate, which is narrowly controlled by Democrats, passed competing budget bills with vast differences on taxes. The Senate Democrat bill includes some tax relief, but the House Republican bill includes substantially more tax relief. The two chambers entered into a joint conference committee to establish a compromise bill, but ultimately missed their deadline before the end of the regular session, which forced them to postpone action until the special session.

One of the major differences between the two bills is the Republican proposal to double the standard deduction for single filers from $4,500 to $9,000 and for married filers from $9,000 to $18,000. Increasing the standard deduction would broaden tax relief, primarily for more middle class families. Senate Democrats wanted to keep the current standard deduction law in place. Under the current law, the deduction would remain the same until 2026, at which point the standard deduction would be lowered, which would increase taxes on some middle class Virginians.

Republican lawmakers also proposed a suspension of the most recent gas tax increase to save drivers about 5 cents per gallon until the hike is reinstated on July 1, 2023. Republicans argued that the state can afford the cut, but some Democrats argued that it would negatively impact transportation funding. Last week, the governor also proposed a three-month gas tax holiday, which would temporarily suspend the full 26.2-cent tax, but it’s unclear whether that would be in conjunction with the former proposal or whether it’s meant as a compromise.

Both chambers support lowering the grocery tax, but the House wants to fully end the 2.5 cent per dollar tax and the Senate only wants to end the 1.5 cent tax collected by the state and keep the 1 cent local option. The Republican plan would reimburse localities for the loss of grocery tax revenue. Both chambers also support providing tax rebates to residents.

The Senate plan supports a 5% pay raise for teachers and the House plan supports a 4% pay raise for teachers. Lawmakers are also split on how to approach lab school funding. Although both chambers support a policy to allow colleges and universities to create lab schools, the House plan is very permissive and the Senate plan includes heavier restrictions. The House plan would allow some public money to be diverted from the current public schools if students leave those schools for a lab school alternative, but the Senate version would ensure that current schools don’t lose money even if they lose students to lab schools.

Lawmakers are also debating the specifics of a plan to create a Virginia Football Stadium Authority to help fund a new NFL stadium for the Washington Commanders in northern Virginia. Both plans would divert sales tax collections back to the stadium, but the Senate plan would also divert some income tax collections to the stadium. Both would allow the authority to contract bonds to pay for the stadium. Some economists have warned that funding the construction of the stadium would be a bad investment, but lawmakers insist that it would create jobs and economic prosperity.

The House and Senate will need to reach a compromise on each of these proposals that can pass both chambers and get Youngkin’s signature.

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