Governor Glenn Youngkin on Monday released a package of 242 budget amendments to find common ground with the General Assembly on a new, two-year budget. The proposed package eliminates all tax decreases and increases, includes a $21.3Bn record investment for K-12 education, and provides $3.2 billion in new spending on health and human resources. We can find Common Ground for the Commonwealth and deliver a structurally balanced, clean budget, on time.

Governor Youngkin’s Proposed Amendments Deliver a Structurally Balanced Budget that Make Record Investments in Collective Priorities Without Increasing Taxes

The Commonwealth is in a stronger financial position than ever before, with steadily rising revenues, record reserves, and a sterling AAA bond rating. The strength of our financial position is the foundation for our ability to deliver a structurally balanced budget while making significant investments and avoiding tax increases.

Virginia’s revenues continue to rise steadily. Annual tax collections rose by 40% in the last five years, fueled by more jobs and economic growth. Our record labor force and strong job growth will continue to bolster revenues – even with economic uncertainty ahead.
On top of that, Virginia is well-prepared for an economic downturn with a record reserve fund, ranked 4th among AAA-rated states in the nation.
The Governor proposed $1 billion in tax relief in his introduced budget, while the budget passed by the General Assembly included tax increases that would cost Virginians $2.6 billion in total. Common Ground – and common sense – says we can write a clean budget without tax increases or tax decreases.

The $64 billion Common Ground Budget eliminates all proposed tax increases and invests a record $21.3 billion in K-12 education by realizing savings from final legislative actions, revisions to forecasts and estimated needs, and utilizing resources differently – all while maintaining long-term structural balance.

The elimination of tax increases and incorporation of a revised ABC forecast reduce General Fund (“GF”) resources to the Commonwealth by $1.5 billion. The Common Ground Budget captures resources that create flexibility to find common ground:
$522 million from reduced GF-funded capital including reverting some projects to proper planning ahead of full resource commitment and utilizing additional long-term bond financing.
$263 million from “NGF swaps” including using $150 million excess Literary Fund resources for teacher retirement, and $113 million from leveraging $98 million of state funds paid in advance to NVTC and incorporating WMATA’s latest forecast for the Metro operating shortfall ($15 million).

After these adjustments, the Common Ground Budget reflects a resource gap of $670 million (1% of the $64 billion budget). Adjustments to conference spending include:

$169 million from the elimination of tax increases that reduce state sales tax distributions.
$113 million from final legislative actions, including vetoes, amendments, and other spending adjustments.
$302 million in adjustments to K-12 line items pending SOQ funding formula reform.
$87 million in adjustments to higher education, still delivering a $1 billion increase over the previous biennium.

The $64 billion Common Ground Budget is structurally balanced. After eliminating all proposed tax increases, making record investments in Education and Health and Human Resources, the budget leaves an unappropriated balance of $17.4 million in FY2026 and at least $236 million in FY2027.

The Common Ground Budget provides a $236 million balance in FY2027, using the existing December 2023 GACRE forecast which incorporates a mild recession in FY2025. After incorporating policy adjustments in FY2025-FY2026, the long-term outlook incorporates:

2% year-over-year salary increases for public employees including public school teachers, state employees, and other state supported local employees.
5.6% year-over-year growth for Medicaid, based on the CMS National Health Expenditure Projection Report.
Leverages $150 million excess Literary Fund resources to support teacher retirement annually, consistent with past practice.
Prudently incorporates a preliminary downward revision to the ABC forecast pending approval by the Board and excluded from the conference report.
Reverts to the pre-pandemic financing model for capital projects, primarily relying on bond financing with $50 million annual cash obligations assumed, representing a 1.6x premium to the average GF capital appropriation in years FY’13-FY’19.
Utilizes a prudent revenue forecast that excludes the benefit of $828 million in year-to-date collections that exceed the current FY2024 forecast.

The structural balance of the Common Ground Budget confirms we can make unprecedented investments in collective priorities without raising taxes.