July 12, 2023
How Does Virginia’s State Budget Work?
Why the budget matters
Creating broadly shared opportunity requires investing our resources in the building blocks of thriving communities, such as education and health. That’s why the state budget is a critical tool to meaningfully dismantle barriers for people of color and families with low incomes across the state.
How big is Virginia’s budget? Where does the money come from?
For the budget year that starts July 1, 2023 (fiscal year 2024), Virginia’s total state budget is $76.6 billion. Most of that ($48 billion, which is 63% of the total) is what’s known as the non-general fund budget, which includes federal grants for things like health care, gas taxes earmarked for transportation, and tuition payments from students at our public colleges and universities. The part of the budget over which legislators have the most flexibility, the general fund budget, is $28.4 billion for the fiscal year that starts July 1. That general fund budget is funded mostly through individual income taxes plus the sales tax. Corporate income tax revenue is smaller as a share of state income tax revenue than in the past. Virginia’s corporate income tax provided 15% of Virginia’s income tax revenue in 1980 compared to just 9% this year.
How does Virginia’s state budget process work?
Virginia has a two-year budget process.
Each December, the governor introduces a budget proposal. For even-numbered legislative years, the governor proposes a budget for the upcoming two fiscal years and changes to the current-year budget, and for odd-numbered legislative years, it’s a set of proposed amendments to the current two-year budget. That meant that in December 2022, ahead of the 2023 session, Governor Youngkin proposed a set of changes to the current two-year budget that covers this fiscal year (which started July 1, 2022) and the upcoming fiscal year (which starts July 1, 2023).
Next, during the legislative session, the House and Senate each propose amendments to the governor’s proposal. After each legislative chamber rejects the other’s proposal, the House and Senate appoint “conferees” who negotiate a deal and present a “conference report” that the House and Senate then approve.
Then, the governor has the opportunity to propose amendments and line-item vetoes to the budget, which the legislature then votes up or down. If everything runs on time, that happens during the “reconvened” session on the sixth (or seventh) Wednesday after the end of the regular session.
Budget & Revenue