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March 25, 2022

TCI Calls on the General Assembly to Prioritize Parents and Families in Tax Choices and Education Funding

VIRGINIA – Today,  Ashley C. Kenneth, President and CEO of The Commonwealth Institute for Fiscal Analysis (TCI) released the following statement with regard to the upcoming special session related to the budget, scheduled for April 4: 

“The budget decisions made by Virginia legislators over the coming days will affect millions of Virginia families. Legislators must prioritize a budget that is responsive to the needs that Virginia families and communities have voiced. 

“Polls have consistently shown what people across Virginia want and Virginia’s parents deserve a budget that helps them make ends meet and invests in the next generation. A budget that prioritizes parents includes three cornerstones: 

  • Increase investments in K-12 education to make sure our students are learning in a safe and healthy environment and where they are supported academically, socially, and emotionally;
  • Provide economic relief through one-time tax rebates targeted to parents;
  • Make the Earned Income Tax Credit (EITC) fully refundable to help families who are living paycheck to paycheck.

“While the budgets proposed by the House of Delegates and Senate have significant differences, there is some common ground to build on. For example, both budget proposals included one-time tax rebates. Both proposals would reduce sales taxes on groceries, even as the specific details vary. 

“But a final budget agreement has been delayed and made more difficult as a result of specific proposals that would do little to help parents and families who need it the most. 

“One example is doubling the standard deduction, which is by far the single most expensive proposal with a cost of about $2.1 billion in the next two years alone. Despite the large price tag, this policy would leave out many families who are struggling to make ends meet and drain budget resources for other critical priorities, including public education. 

“This is not a future, hypothetical concern: the budget proposal from the House of Delegates doubles the standard deduction and, compared to the Senate’s budget proposal, reduces state funding for teacher pay by more than $68 million, cuts $210 million in state funding for high-poverty school divisions, and reduces funding for early childhood programs by $38 million.    

“Another example is the governor’s recent proposal to suspend Virginia’s 26-cents per gallon gas tax for three months and to cap gas tax rates in the future. This idea would benefit oil producers and out-of-state residents more than Virginia families, while also taking away resources for transportation. A better solution is a refundable EITC, which was included in the Senate’s budget, and would put an average of $500 in the pockets of families who need it most. 

“Finalizing the budget is the single most important thing the General Assembly can accomplish right now. The components of a final agreement will have real impacts on families, communities, and the trajectory of our commonwealth over the next two years. It is important that lawmakers stay focused on solutions that work for parents and families. 

“We urge the governor and budget leaders to spend the coming days coming to an agreement on a responsible plan that invests in schools and makes the Earned Income Tax Credit fully refundable to help the families who need it most.” 

Background: In February, Virginia’s House of Delegates and Senate approved their proposed changes to Virginia’s budgets for the current year and upcoming two years. These proposals have some commonalities, yet take very different approaches on tax policy and investments in Virginia’s families and communities. A summary of key proposed changes in several issue areas can be found here.

Several education proposals up for consideration include teacher pay, additional support for students who face additional barriers to learning, and funding additional staff positions. More details can be found here

About 600,000 working families in Virginia receive the federal EITC, and they are also able to receive a state EITC that matches up to 20% of their federal credit. Because Virginia places overly tight limits on the state EITC, most families who qualify for the credit do not receive the full amount of the state EITC. And the majority of EITC filers have children in their household. A refundable state EITC would provide families with a larger tax refund, helping to offset sales, excise, and property taxes paid, and would put an average of $500 in the pockets of families with low incomes every year. Families across the commonwealth — in every district and locality — receive the federal EITC. Many of these families would benefit from a refundable state EITC.

The Commonwealth Institute

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