When the General Assembly comes back to town on Wednesday, the big question is about compromise — whether one is possible on Gov. Glenn Youngkin‘s proposal to reject the legislature’s $1 billion sales tax on digital services or whether his record 153 vetoes means finding accord on a state budget is out of reach.
Legislators are unlikely to overturn any vetoes — most were on legislation that passed on essentially partisan lines in a nearly evenly divided House of Delegates and state Senate. It takes a two-thirds vote to override a veto.
But so far, leaders of the Democratic majorities in the House and Senate do not sound convinced about Youngkin’s budget amendments.
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“All the signals he’s sending are the wrong ones,” said House Appropriations Chair Luke Torian, D-Prince William.
“I doubt seriously that there’s going to be any compromise,” Torian said.
If the House and Senate reject Youngkin’s amendments, the governor could veto the budget and call for a special session, presumably hoping a looming July 1 deadline gets him a budget without a tax increase, instead of a replay of his proposal and its rejection.
He could opt not to sign a budget that rejects his amendments — he has been saying he will not sign a budget that includes a tax increase, which sounds like a veto threat but could simply mean he’s positioning for future electioneering.
The stakes are high. Virginia needs a budget in place by July 1 if state employees are to be paid and if a huge part of local schools spending is to be funded. It is the budget that says how state highways are to be patrolled, how mental health services are to be provided, that state parks are open, that court cases are heard.
That’s means there will be a lot of pressure to do something, said John McGlennon, a College of William & Mary political scientist. As a member of the James City County Board of Supervisors, McGlennon is one of the hundreds of local officials wondering if they will get the funds they need to run schools the ways they had planned.
“We have a July 1 ‘drop dead’ date,” he said, referring to the beginning of the state’s next fiscal year, “but the gap between the parties is pretty wide.”
He added: “With such an enormous difference, the problem for the Democrats comes in not having the money to do some of their major initiatives. This is the area where I expect some hard-knuckle bargaining, and some effort among the Democrats at triage: which amendments will they prioritize and which get passed off for now.”
It will almost certainly take more than the usual single day for a reconvened session.
“There’s more than can be done in a day,” McGlennon said. “But I don’t think we’ll get a government shutdown.”
Youngkin’s aim
Youngkin hopes he can convince some Democratic legislators — it would take only two in the House and two in the Senate — that he has found a way with more than 240 amendments he is calling his “common ground budget” to avoid the tax increase while funding most General Assembly priorities.
“We were able to truly move a long way towards fully funding the conference report’s priorities,” Youngkin told the Richmond Times-Dispatch, referring to the budget approved by the legislature. “I say it with great sincerity.”
Youngkin added: “I am very hopeful that we can come together around this budget framework — I believe common ground is exactly that and once they have completed their review and really do, I hope, fully understand ... that we can get to everyone’s priorities in such a large measure, I’m hopeful that we can move forward on this in time for Virginians.”
It could be a tough sell.
State Sen. Creigh Deeds, D-Charlottesville, a senior member of the Senate Finance and Appropriations Committee, said: “It’s really frustrating. I think we’re in for a heck of a workday next Wednesday.”
But no one wants to see a Washington-style shutdown.
“Everybody knows their constitutional responsibility, even when they don’t agree on specific items,” said Senate Minority Leader Ryan McDougle, R-Hanover.
“I think we’re going to get to a resolution,” he said. “I’m not willing to promise you that the resolution is coming in the next week.”
Virginia has come close but has never reached the point where it did not have a two-year budget in place for the July 1 start of a fiscal year and so shut down the state government.
The state eked by last year, when the General Assembly was able to agree only on a few tweaks to the budget that was already in place for the current year in time. The more comprehensive update of that budget did not come until a special session in September.
Last year’s standoff pitted Youngkin and a Republican-majority House against a Democratic majority state Senate. The November election swung the House to the Democrats, if narrowly with a 51-49 split, and confirmed a narrow 21-19 Democratic majority in the Senate.
“The Governor is once again misleading the public. Go look at the videotape — he actually proposed closing the ‘tax loophole.’ ‘Tax loophole’ are his own words regarding the unfair way digital goods and services are treated. He needs to own his own ideas,” said House Speaker Don Scott Jr., D-Portsmouth, in a statement.
“Twenty percent of his own caucus joined us in passing this budget because Republicans recognize that we need to catch up to the 21st Century,” Scott said. “We’ve reached across the aisle, and will continue to do so, to ensure the budget is sound and that Virginians will continue to have their needs met.”
‘Borrow and spend’
Mark Rozell, dean of George Mason University’s Schar School of Policy and Government, said: “Partisan positions are so fixed right now, which is making compromises on the budget very difficult.”
“We’re in this unfortunate situation in which the governor has repeatedly gone public to stoke the GOP base, and some Democratic leaders poke him in the eye constantly on social media every time one of his initiatives fails,” Rozell said.
“Some of the recent compromises by the governor on some key Democratic initiatives are a good sign that he may be extending a hand of cooperation. If the governor is to have a governing legacy, he needs to do more of that given the realities of the power dynamics in the General Assembly,” Rozell said.
“His very political future may depend on that.”
Olusoji Akomolafe, chair of the political science department at Norfolk State University, said Youngkin’s more conciliatory tone on the General Assembly plan he had been calling the “backwards budget” could still work.
“He would have avoided having to veto the entire bill while considerably increasing the chances of passing the budget when the General Assembly reconvenes on the 17th,” Akomolafe said.
Youngkin says his budget preserves more than $800 million of spending increases the General Assembly added to the spending plan he proposed last December.
His amendments drop his proposed $1 billion tax decrease — a package of income tax cuts and a version of the sales tax on digital services that the General Assembly expanded upon — as well as some $600 million of the $850 million of his proposed spending priorities that the assembly cut.
He says it works because his amendments would tap some pools of money — the bond market, the Literary Fund and reducing the state’s additional contribution to cover the Washington Metro’s financial shortfall by tapping funds already deposited for that.
Deeds said of Youngkin’s approach: “It’s not tax and spend — it’s borrow and spend.”
Torian, the House Appropriations chairman, said: “He’s basically searching for money so he can find a way to pay for his initiatives. He’s robbing Peter to pay Paul.”
Torian is particularly offended by Youngkin’s cuts to the assembly budget for higher education to moderate tuition increases, which the governor did not address in the budget he introduced in December.
At the same time, he said the governor wants to restore more than $85 million in unspent money for “lab schools” that the assembly had returned to the general fund.
Deeds, chairman of the Virginia Behavioral Health Commission, is also upset over the governor’s proposed cuts of $7.5 million from the assembly budget for community services boards to hire and retain staff, as well as cuts of $6 million for discharge assistance plans to get people out of institutions and another $6 million cut for permanent supportive housing in communities for those leaving institutional care.
Though Democrats’ majorities are narrow, William & Mary’s McGlennon does not see Youngkin’s budget amendments likely to win over even the small number of Democrats needed for approval.
It will be up to Democrats’ House and Senate leaders whether to go along, McGlennon said.
“When any legislature is this closely divided, party discipline is intense,” he said.
Youngkin’s record vetoes
Youngkin’s already sour relationship with Democratic leaders did not get any sweeter with his vetoes of a record 153 bills this year — 194 since he took office more than two years ago.
“He keeps saying this is common ground, but for me it doesn’t make common sense for the governor to veto this number of bills,” said Senate Finance Chair Louise Lucas, D-Portsmouth, who thwarted Youngkin’s proposed $2 billion sports and entertainment complex in Alexandria.
“A lot of folks are unhappy,” Lucas said. “It’s anybody’s guess what happens going forward.”
McGlennon thinks some of Youngkin’s vetoes — like one on a proposal for local sales tax surcharges for school construction — as well as amendments to the hard-fought measure legalizing skill games, where support crossed party lines, might offer options for deal-making.
With votes on these, he said, Democrats will want to test how firm Republican support for Youngkin is. And if they find holes, Democrats will be less inclined to give much on the budget.
On the budget itself, Del. Barry Knight, R-Virginia Beach, who played a central role nailing down last year’s belated budget compromise, said he thinks there’s room for agreement in Youngkin’s amendments.
“Actually, on the programs that the Democrats want to spend on, the governor has given them a lot of money,” he said. “If I’m them, it looks like a hell of a concession from the governor,” Knight said.
But he said: “I think both sides need to turn down the temperature. …
“This isn’t about egos and personalities,” Knight added. “It’s about getting a responsible budget for the state of Virginia.”
Looking ahead
Still, there is more than bad feelings at stake, said Bob Holsworth, a longtime Virginia political analyst and a former dean at Virginia Commonwealth University.
“I doubt that there is significant Democratic support for Youngkin’s approach. He basically used the amendment process to rewrite huge chunks of the budget, and I don’t think that Democratic legislators will allow this to pass unchallenged,” Holsworth said.
“He also, however, essentially modified the revenue forecast to the upside, allowing him to reduce the cuts he had to propose when he removed the tax increases from the budget. But I would be relatively certain that Democrats will not accept the cuts he did make to K-12,” Holsworth added.
The 2024 session, and Youngkin’s vetoes of such top Democratic priorities as a ban on assault weapons sales, a minimum wage increase, paid family leave, a prescription drug affordability board, and regulation and taxation of cannabis sales strained relations with the General Assembly.
Those vetoes, which would require an unlikely two-thirds vote to overturn, kill those Democratic hopes.
Youngkin’s proposed amendments to the hard-fought compromise over skill games — slot-machine-like electronic gaming devices — and legislation requiring insurance coverage for contraceptives angered many Democrats.
His unexpected bill signatures on certain measures Democrats backed — including a marriage equality bill and a bill that makes it a felony for a parent to let a delinquent child or one found to pose a threat of violence get ahold of a gun, have not helped.
Northern Virginia’s concerns
And while influential Northern Virginia groups, like the region’s technology association, like Youngkin’s proposal to drop the General Assembly’s sales tax on digital services, the governor’s approach to Washington Metro’s financial challenges is drawing fire.
It “doesn’t meet the standard for me for partnership, or reaching common ground,” said Arlington Supervisor Matt de Ferranti, chairman of the Northern Virginia Transportation Commission, which manages local and state money for Metro.
Instead, it leaves Northern Virginia localities with tough choices next year between increases in local taxes, cuts in programs and delayed projects, including a new entrance at the Crystal City Metro Station that serves Amazon’s East Coast headquarters in Arlington County, he said.
For Democrats who see Youngkin’s amendments as a kind of shell game, the Metro funding move looks like a shift of state funds from Northern Virginia to other statewide concerns.
“Despite signing bills that many Democrats supported, the outcome of the session to date is increased tension in Youngkin’s relationship with the Democratic majority,” Holsworth said. “There is growing distrust, and I think that this is likely to characterize the remainder of his term.
“The Democrats will be treating the governor as a lame duck for the rest of 2024 and 2025,” Holsworth said.
And if Youngkin has plans beyond the one term the state constitution allows governors: “He will have to talk less about what he accomplished and more about what he prevented — this isn’t usually the best formula for elevating one’s national stature.”