Virginia lawmakers return to Richmond as budget battle fuels shutdown talk

The debate over how high taxes need to be to properly fund core government services is a more normal topic than many of the hyperpartisan culture war issues that now dominate politics. But the budget battle playing out between Gov. Glenn Youngkin and the Democratic-led General Assembly is anything but routine.

One day before state lawmakers were set to return to Richmond to take up Youngkin’s amendments and vetoes, House Speaker Don Scott, D-Portsmouth, posted a campaign-style video accusing Youngkin of standing in the way of a bipartisan budget that boosted funding for K-12 education.

“Don’t let Pretending Glenn shut down the government,” the video concludes, invoking the prospect of what could happen if Virginia’s politically divided government doesn’t pass a new budget before the current one expires on July 1.

When the General Assembly reconvenes Wednesday, the budget and the 233 amendments Youngkin proposed to it will be the top item on the agenda. But after weeks of fiery rhetoric, it’s unclear how the budget fight might deescalate toward a more amicable conclusion.

Avoiding full veto, Youngkin sends lawmakers 233 budget amendments

Tuesday evening, the Youngkin administration released new financial data showing March revenues were up 5% compared to a year ago, results the governor has used to argue the state can fund policy priorities with money already coming in without needing to raise taxes.

“March’s solid results provide stable ground for us to work together to land a budget that meets our collective goals,” Youngkin said in a news release.

If the legislature rejects most or all of Youngkin’s amendments, the governor could still veto the budget, a move that could require lawmakers to hold a special session to try again for some sort of compromise.

Few lawmakers appear to be in a compromising type of mood.

One of Youngkin’s top critics in the legislature — Sen. Louise Lucas, D-Portsmouth — posted a social media meme showing herself in boxing gloves, seemingly on the verge of socking the governor.

“Buckle Up Glenn- I am coming back to Richmond on Wednesday to deal with your nonsense,” Lucas said in her post on X, the platform formerly known as Twitter.

The latest anti-Youngkin broadsides from Democratic leaders come after the governor vetoed a record 153 bills approved during the 2024 session and held several media appearances blasting the legislature’s budget proposal as “backward” for including a tax increase. The Democrats’ approach, Youngkin told a crowd at a Richmond-area diner last month, is about trying to tax Virginians “as much as you can take, before you move away.”

Youngkin has softened his tone more recently as he unveiled a new spending plan he called the “common ground budget,” which abandons his push for tax cuts and funds some policy priorities sought by Democratic legislators — just without the digital sales tax that was envisioned as paying for them.

Virginia political analyst Bob Holsworth said the budget dispute began last year, when Youngkin introduced a proposal with broad tax cuts even though Virginians had just elected Democratic majorities in both legislative chambers.

“Younking presented a budget as if he had won the election,” Holsworth said. “It had no possibility of being taken seriously and he didn’t seem to recognize that the dynamic had completely changed.”

The governor himself proposed expanding the state’s sales tax to apply to digital downloads and streaming services, a change both sides have characterized as a way to modernize a tax code still built around physical goods instead of the increasingly online economy. However, he proposed a digital sales tax as a way to offset other tax cuts, a proposal he dropped from his latest offer that envisions leaving Virginia’s tax policies unchanged.

The General Assembly’s budget anticipates roughly $1 billion in new revenue from the digital sales tax, money Democratic leaders want to use to boost funding for K-12 schools. Youngkin has insisted the state’s finances are strong enough to spend more without raising taxes, but skeptical Democrats contend the governor’s plans rely on gimmicks like shuffling money around and changing when particular initiatives get funded.

Youngkin’s proposal envisions a roughly $64 billion general fund, compared to a $65.5 billion general fund in the General Assembly’s budget. The general fund is the main pot of discretionary money policymakers can spend on new initiatives. Nongeneral fund money is earmarked for a particular purpose, such as gas taxes dedicated specifically to fund highways and roads.

The governor and the legislature are also at odds over language in the budget that would require Virginia to participate in the Regional Greenhouse Gas Initiative, a multi-state initiative aimed at reducing planet-warming carbon emissions. Youngkin pulled Virginia out of the program after becoming governor, portraying it as a backdoor tax regular Virginians were paying on their power bills. Democrats argue Youngkin didn’t have the power to make that move and are challenging his decision to remove Virginia from a program that provides funding for flood resilience and energy efficiency programs.

In addition to the budget, the General Assembly will also take up Youngkin’s overhaul of a controversial bill to legalize and regulate skill games, the slots-like gambling machines that have spread widely in Virginia convenience stores, truck stops and sports bars. The governor has proposed a much tougher regulatory approach to the machines than what the General Assembly approved.

The legislature is also expected to take up Youngkin’s veto of a bipartisan bill that would have allowed local governments to raise sales taxes to build new schools. The measure passed with enough Republican support that the General Assembly could potentially override the governor on the issue.