Statement: Budget Leaders Maintain Many Key Investments, Miss Opportunity To Secure Ongoing Funding

Ashley C. Kenneth, President and CEO of The Commonwealth Institute for Fiscal Analysis (TCI), released the following statement regarding the proposed budget compromise lawmakers will consider today:

“TCI is glad to see that budget negotiators maintained nearly all investments from the budget approved by the General Assembly this past March. These investments were initially made possible by rejecting Governor Youngkin’s proposed tax package that would have lined the pockets of millionaires and billionaires and improving his initial proposal to close the ‘tech tax loophole’ by ensuring corporations pay more of their fair share in this modernization of our tax code. 

“However, by backing off of the proposal to modernize our tax code, lawmakers turned to a variety of tactics that may jeopardize our ability to support these critical investments in the future. This new budget compromise is able to maintain many investments, in part by carrying forward $499 million from the current budget year (FY24) due to stronger than expected revenue collections, swapping $468 million of cash to debt for capital projects, and capturing savings from failed legislation and reductions from mostly technical adjustments. 

“One of the biggest missed opportunities is the loss of $169 million that would have gone to public K-12 education as a result of modernizing our tax code. At a time when every effort needs to be made to meet the funding needs of Virginia public schools, as highlighted by the recent JLARC report, it is clear we still have a long way to go to fully fund our schools. 

“That is why TCI remains committed to working with lawmakers to advance tax fairness in future budgets so that we have reliable resources to make transformational investments in the building blocks of our communities. As it stands, Virginia’s tax code is upside-down — those with the highest incomes pay the least taxes as a share of income, and teachers pay the same top rate as millionaires and billionaires. 

“Updating our tax code to reflect the economy that we live in today and making sure that millionaires, billionaires, and profitable corporations pay their fair share will continue to be top priorities for TCI, our organizational partners, and community members who understand the need to raise fair and sustainable resources to invest in our future.”