Virginia lawmakers are bucking the governor's budget proposals by approving a billion-dollar tax rebate to taxpayers, reflecting a trend of states with budget surpluses but the deal has yet to be finalized.
"I look forward to finishing our review and while there are areas where we agree and others where we may disagree, we will go to work to deliver for Virginians, as we have done the past three years," Republican Gov. Glenn Youngkin, said in a statement.
Both houses of the state's Democrat-controlled General Assembly agree on kicking rebates back to taxpayers, to the tune of $200 for individuals and $400 for couples. The bills also call for raising the standard state income tax deduction.
Youngkin, who has signaled a desire to move into national politics, is proposing a billion dollars' worth of rebates dispensed through adjustments to the state's personal property tax on cars. The current base rate is pegged at $4.15% per year. The car tax funds flow into the coffers of state and local governments.
Youngkin has tangled with the General Assembly in the past and come out on the short end when they helped scuttle
The budget process is still fluid as the houses will have to come together and advance a final version before Feb. 22. If the GA and the governor can't come to an agreement the current budget will still be in force.
States refunding budget surpluses, some of which are statutory, are part of a trend in tax policy that concerns some policy experts, but rebates remain politically popular.
"Many of us have been fighting to make sure that Virginians get some of the surplus back," said Senate Minority Leader Ryan McDougle. "Even though the form might not have been in the way that some of us initially sought it to be, it is money back in their pockets, and that is positive."
According to the National Association for State Budget Officers, Youngkin's proposed budget amendments revealed in December includes making a $295 million deposit into Virginia's reserve fund.
Last week Fitch Ratings assigned a AAA rating to $272.5 million in general obligation bonds issued by the Commonwealth of Virginia. The bonds are expected to be sold on or around Feb. 14. Fitch has also affirmed the commonwealth's 'AAA' Long-Term Issuer Default Rating.
Per Fitch, "Virginia's 'AAA' Long-Term IDR and GO ratings reflect the commonwealth's substantial fiscal resources, careful management of financial operations and debt, and exceptional gap-closing capacity.
"The commonwealth's strong economic profile provides a stable revenue base and solid growth prospects for tax revenues. Virginia also maintains a low long-term liability burden composed of debt and net pension liabilities relative to its economic resource base."
Some states are also moving towards eliminating income tax completely or installing
According to the Tax Foundation, "Thirty-nine states will begin 2025 with notable tax changes, including nine states cutting individual income taxes, two of them implementing flat taxes, three states cutting corporate income taxes, and two states adopting new first-year expensing provisions."
