RICHMOND — Virginia Treasury Secretary Steven Cummings told the Senate Finance and Appropriations Committee on Tuesday that the state’s finances are doing well, even as economic uncertainty puts state budget talks on hold.
“We are pretty happy with where we are,” he said. “We are still cautious about the future. We still believe the recession will be delayed.
Virginia added 339,000 new jobs in May at a “surprisingly strong” pace, Cummings said, with most of the increase occurring in low-wage sectors. He explained that revenue collections have continued to exceed expectations by $948 million so far this year, but revenue is expected to decline in 2024 due to the newly enacted pass-through entity tax. He said this was overestimated due to timing issues with the refund. $600 million increase.
Sales tax collections and deed records are significantly lower than expected, but Cummings said this will be offset by higher than expected other sources such as non-withholding income, interest income and corporate income taxes.
Cummings said much of the state’s recent economic turmoil was due to clashes in Congress over debt ceilings, but that Congress recently reached a deal that averted a default. He said the deal would have little impact on Virginia.
“It was a big hiccup, but it’s been resolved,” he said.
The General Assembly last year approved a two-year budget. But lawmakers are discussing a series of amendments to last year’s plan, including a $1 billion tax cut proposed by Republican Governor Glenn Youngkin.
As negotiations drag on, Virginia’s budget revision is in a delicate position
Democrats oppose Mr. Jonkin’s tax cuts, particularly his proposal to cut the corporate tax rate from 6% to 5%. After the meeting, Senator Louise Lucas, a Portsmouth Democrat and committee member, said the presentation had not swayed her opinion.
“I’m still not in favor of tax cuts,” she said. “We’re still talking about a recession, so why think about tax cuts when you don’t know what situation or situation you’re in?”
The ongoing budget negotiations are led by House Appropriations Committee Chair Barry Knight and Senate Finance and Appropriations Committee Chair Janet Howell and Co-Chair George Barker. But they had previously said they could not produce a final document until at least June, citing uncertainty about the debt ceiling.
The three members of Congress operate largely privately, so very little information has been released to the public.
Howell and Barker said Tuesday there was no reason to rush negotiations because Virginia already has a two-year budget. Howell said face-to-face talks could resume in about two weeks after Congress reached a compromise on the debt ceiling. That will be after the June 20 primary election.
Lawmakers may not be in a hurry, but the governor seems to be growing impatient.
Youngkin spokesman Macaulay Porter said in a statement last week that “Virginians need funding and the governor has continued to encourage the General Assembly to reach a resolution.” “As the governor said, Virginia has surplus funds, so it can afford to cut taxes and invest in key priorities.”
On Tuesday, Sen. Tommy Noment (R-Williamsburg) blamed politics for the delay.
“I’ve been involved in this game for years, and at the end of the day, it all comes down to reasonable compromises,” the Senate minority leader told Virginian Pilots. “The objective from a political point of view is to argue that everyone can walk away, the House of Representatives and the Senate can walk away, and that is what we have achieved. Arrogance exists…it’s just a matter of solving, and rational people can do it.”
Katie King, katie.king@virginiamedia.com
