While Virginia lawmakers debate tax cuts, agreement found on education and mental health initiatives

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Del. Barry Knight, chair of the House Appropriations Committee, said he’s ready to return to state budget negotiations.

“I am certainly willing and able to go back,” said Knight, R-Virginia Beach. “We will see if we can resolve the rest of it. Sometimes you just need a little cooling off period.”

The General Assembly’s legislative session ended last week, but budget conference committees — headed by Knight, Senate Appropriations Committee Chair Janet Howell and Co-Chair George Barker — were unable to reach an agreement.

The state passed a two-year budget last year. But conferees were debating a series of changes to last year’s plan, including an extensive series of $1 billion in tax cuts proposed by Gov. Glenn Youngkin and backed by Republicans.

Youngkin, who campaigned on a promise to cut taxes, sought the reductions on top of $4 billion in tax cuts the General Assembly approved last year.

Although legislators are not required to update the budget, Knight believes they “absolutely” will reach a consensus in the coming weeks or months.

Among the cuts, Youngkin is pushing to increase the standard income tax deduction for individuals and couples, lower the corporate tax rate from 6% to 5%, and remove age requirements so younger veterans could benefit from a law passed last year allowing those 55 or older to deduct from their taxable income tens of thousands of dollars in military retirement pay.

Democrats, meanwhile, have stressed that the state has other priorities, such as education and schools. They voiced especially strong opposition to lowering the corporate tax rate.

In a Friday statement, Howell, a Reston Democrat, said negotiations are ongoing.

“Slowly we are narrowing our differences, although some major ones continue,” she wrote. “Tax relief and the amount of funding for education from pre-school to graduate school are major outstanding issues.”

Knight said this year’s shorter 46-day session also created extra challenges.

“At the very end of the session, they decided they didn’t want to go quite as far on tax cuts as I did and it kind of broke down from there,” he said. “I think maybe politics got into play a little bit. Everyone is running in the primaries, and I think there were some sensitivities there.”

But the delegate said they were largely on the same page about allotting $900 million for various education and mental health initiatives.

“We were in agreement on a lot of that,” he said.

Knight added he understood corporate tax cuts may be off the table for this year.

“We had talked about maybe not doing much of that or any of that and focusing more on other tax initiatives,” he said.

Youngkin recently told reporters he believed it was possible to cut taxes while still supporting schools and behavioral health.

“We were successful last year in finding common ground and that was good for Virginia,” he said. “And I’m hopeful we can find the same place again.”

After budget conferees reach an agreement, the General Assembly will reconvene to vote on the updates.

Although the purpose of a state budget is to divvy up funding, in many instances it has also been used to resurrect legislation that had otherwise died, meaning other surprises could be in store.

Katie King, katie.king@virginiamedia.com