February 13, 2025
Piecing it Together: House and Senate Budgets Hold Opportunities for Protecting and Investing in Families and Communities
State budget decisions are critical to realizing the vital investments our communities need. While Governor Youngkin presented a budget that missed the mark in several key areas, the House and Senate budgets took steps in the right direction toward building a commonwealth where everyone can thrive. They also showcase how policymakers can come together across political parties and chambers to do the real work of helping families, in stark contrast to the troubling chaos and threats to our communities we have seen in the last few weeks from federal officials.
There are several more steps until we get to a final budget. The latest budget proposals provide a key opportunity to speak up and let lawmakers know what’s most important to our families and our communities. (We’ve included budget amendment numbers to refer to when reaching out to lawmakers.)
Below are key choices that the House and Senate made in the areas of:
Tax
The structure of our tax code reflects our values as a commonwealth. Budgets that invest in our communities should also include tax choices that make sure those with the least are lifted up, while the wealthiest among us pay their fair share. Unfortunately, Virginia has an upside-down tax code, where families with the lowest incomes pay higher shares of their income on state and local taxes than those with the highest incomes.
- Improving the state Earned Income Tax Credit (EITC): The state made meaningful progress in addressing tax fairness in 2022 when it created a refundable option for the state’s EITC. The Joint Legislative Audit and Review Commission (JLARC), the state’s legislative research agency, found that this measure, along with increasing the state’s standard deduction, helped make the state’s tax code more fair. Both the House and the Senate took a critical step in continuing this progress in their recently proposed budget amendments. Both opted to increase the state refundable EITC from 15% to 20% of the federal EITC for the next two years (4-14 #3h and 4-14 #1s). This will put meaningful cash back in the pockets of families. A married couple with two children and a $30,000 annual income, for example, would see $344 more back when filing their taxes this year from a 20% refundable EITC. This means more money back for families that could help put food on the table, keep the lights on, and pay rent. Both chambers did this alongside a modest increase to the standard deduction.
- One-time, nonrefundable rebates: Both chambers also included one-time rebates, which, if approved, would go out by fall 2025. The rebates are $200 for single filers and $400 for married filers filing jointly (258 #2h and 255 #1s). Unfortunately, the proposed rebates are nonrefundable. This means they cannot exceed a filer’s income tax liability after credits, subtractions, and deductions. This measure excludes many low-income families from being able to access some or all of the rebate. Just 1 in 3 families in the bottom 20% of incomes in the state (with incomes less than $31,100 a year) are estimated to see a rebate, while almost all families in the top 40% of incomes (incomes more than $101,300 a year) will see a rebate.
Education
High-quality public schools are the pathway to economic mobility and the bedrock of communities and a functioning democracy. Unfortunately, Virginia has never had high-quality schools in every community, whether by neglect or design. In recent years, legislators have started to make progress on reversing that situation. The state’s research agency, JLARC, has created a blueprint for further improvements.
This year’s House and Senate budgets make meaningful progress in implementing the short-term recommendations from JLARC and the state’s joint subcommittee studying K-12 funding. Each invests $223 million to fund the state’s share of support staff costs in the upcoming school year, thereby finally lifting the arbitrary “support cap” that has been in place since the Great Recession. The House and Senate also both create a flexible add-on to help local school divisions meet the needs of students with disabilities. Each chamber also rejects the governor’s proposal to divert public funds to private schools — a smart choice because research shows mixed to negative outcomes from vouchers on student achievement. There are some remaining important options before legislators with regard to the K-12 education budget.
- Strengthening the Joint Subcommittee on Elementary and Secondary Education: The House and Senate both acted to provide more resources to the Joint Subcommittee that is studying rehauling how Virginia calculates costs for K-12 schools. Budget conferees should consider taking the best of each chamber’s budget, including the clearer and simpler appropriation in the House budget and the stakeholder workgroup in the Senate budget (1 #3h, 44 #1h, and 1 #1s).
- School-based mental health: The House amendment provides clear authority to allow school divisions to contract with mental telehealth providers, which allows flexibility in providing mental health services to students (295 #5h). In addition to accepting this amendment, policymakers should consider using a portion of any available revenue from a reforecast or identified savings to restore dedicated funding for mental health supports in schools.
Health Care
We all understand how crucial access to health care is, especially for people struggling to make ends meet. Current state budget language and threats from the federal level mean that people who get health care through Medicaid/CHIP programs and Virginia’s health safety net facilities need our support more than ever. In 2018, Virginia expanded Medicaid under the Patient Protection and Affordable Care Act (PPACA) to provide essential care to more low-income adults, bringing peace of mind to parents and adults in every corner of Virginia, from Arlington to Abingdon. Everyone deserves a fair shot at good health, and programs like Medicaid expansion and a well-funded health safety net help support a healthier commonwealth.
- Protecting Medicaid Expansion: Due to current state budget language, even a 1% reduction in the share of costs paid by the federal government would trigger the automatic loss of Medicaid coverage for over 630,000 Virginians. The Virginia Senate proposes that prior to disenrollment due to federal funding cuts, the Joint Subcommittee for Health and Human Resources (HHR) Oversight would be required to convene before this occurs. This budget amendment is an important step in the right direction that allows state lawmakers to weigh in before people and families are directly impacted by federal decisions. (288 #7s)
- Supporting Virginia’s Health Safety Net Providers: Free and charitable health clinics and Federally Qualified Health Centers (FQHCs) are being stretched thin by growing demand from people who face barriers to health care coverage and rising costs of care. Many patients who use these clinics and centers don’t qualify for Medicare or Medicaid and may struggle to afford the high cost of private insurance, making these facilities a lifeline for uninsured and underinsured Virginians throughout the state. These clinics provide critical access to integrated, high-quality health care services and reduce hospital readmissions and visits to emergency departments. Both chambers include $500,000 in additional funding for Virginia’s free and charitable clinics. The Senate includes an additional $500,000 in funding for Federally Qualified Health Centers in Virginia. (279 #2h, 279 #1s, & 279 #2s)
Decriminalizing Poverty
Everyone deserves a fair trial, access to legal representation, and the opportunity to feel safe and supported in their communities. We are encouraged to see the House budget take steps toward a fairer criminal legal system by ensuring that more individuals have access to legal representation at a critical stage in the legal process. This will improve fairness in our legal system, since currently people who officially cannot afford counsel (indigent defendants) — who are disproportionately Black and low-income — face larger bail amounts, trapping people in a cycle of incarceration and poverty. Additionally, both House and Senate budgets support funding for community-based programs that address the root causes of violence. These investments will improve outcomes for those navigating the criminal legal system and help support safer communities.
- Counsel At First Appearance: The House included two amendments in their budget (33 #3h and 40 #2h) that will make sure that people in jurisdictions with public defender offices have representation at their first court appearance or arraignment. This first appearance is a critical stage where decisions are made about bail and pretrial detention — decisions that directly impact a person’s ability to maintain employment, housing, and family connections. This will also improve court efficiency and reduce unnecessary spending for both the state and localities. These amendments provide funding for the implementation of counsel at first appearance in public defender jurisdictions and 10 paralegal positions to help smaller and rural jurisdictions.
- Expand Safer Communities Program: Making meaningful investments in community-based programs and resources that promote greater economic opportunity for youth and their families provides them with a sense of peace and stability and helps to address root causes of violence. Increasing funding for the Safer Communities program and expanding to more localities will allow more communities to collaborate on solutions to support safe and vibrant places to live. Both chambers include community violence reduction grants that should be maintained in the final budget (394 #6h and 394 #6s).
Labor & Wage
No matter what we look like or what we do for a living, everyone deserves to earn enough to support their family and have dignity at work. Yet too many Virginians struggle with low wages and lack basic workplace rights. House and Senate budgets present different visions for addressing these challenges. The House budget includes several significant investments in worker rights and protections, while both chambers make progress on state employee compensation and workforce development. Key differences remain to be resolved before the conference budget.
- State Employee Compensation and Minimum Wage: Both chambers propose bonuses for state employees, with the House offering 1% and the Senate proposing 1.5%. The House budget also includes funding to implement a $13.50 minimum wage for state employees, on the path to a $15 minimum wage, if House Bill 1928 becomes law. Budget conferees should adopt the Senate’s higher across-the-board raise while maintaining the House’s minimum wage implementation funding (471 #2h and 469 #1s).
- Worker Rights and Protections: The House budget provides additional support for wage and labor law enforcement activities. A treasury loan is authorized to establish a paid family and medical leave program. The Senate takes steps to align energy project procurement with best practice prevailing wage and apprenticeship requirements. Budget conferees should maintain the House’s investments in worker protections while incorporating the Senate’s approach to maximizing federal funding through strong labor standards (349 #1h, 356 #1h, and 349 #2s). These complementary approaches would strengthen both worker rights and Virginia’s ability to compete for federal dollars.
- Workforce Development Investments: The governor, House, and Senate recognize the importance of career training, with all budget proposals including funding to expand career and technical education programs in prisons. The New Economy Workforce Credential Grant sees varying support levels, with the Senate proposing the largest increase. Budget conferees should maintain these crucial investments in worker training and consider adopting the Senate’s higher funding level (130 #2s).
It’s “tradition” that the House and Senate reject the other’s proposal, sending the proposals into “conference.” Budget negotiators, or conferees, were recently announced, and they will work out the differences between the two proposals to offer up a final budget proposal. If everything runs on time, we expect this conference report to be presented on or around Wednesday, February 19, making this next week a critical time to reach out to lawmakers about your priorities. Together, we can advance a budget that invests in all of us.
Categories:
Budget & Revenue, Decriminalizing Poverty, Economic Opportunity, Education, Health Care
