Gov. Glenn Youngkin traveled to the Leesburg Diner Thursday morning to pitch his proposed tax cuts, including trimming the grocery tax, doubling the standard deduction on state income tax and pushing a five-cent increase in the gas tax back a year.
“Today, we have government coffers that are full. Government coffers that have, in fact, exceeded all forecasts, by over-taxing and over feeing Virginians, and I believe that’s your money, not the government’s money,” he said.
Youngkin inherited a Fiscal Year 2021 $2.6 billion surplus, the largest in state history, from the Northam administration as tax revenues during the pandemic far outpaced projections, particularly on the income tax. However, much of that was already allocated by the time he took office, including mandated contributions to the state’s Rainy Day Fund and Water Quality Improvement Fund.
“We don’t want to put ourselves in a circumstance where we’ve made a short-term decision where we can’t keep our balanced budget, which we have in Virginia,” Youngkin said. He pitched a vision of tax cuts with no concurrent trimming in the budget, gambling that the revenue surpluses will continue.
“Rather than having to, quote, cut things to provide tax cuts, what we can in fact do is just tax people less and take in less money because we don’t need that big a surplus,” he said.
Youngkin pointed out the grocery tax is a regressive tax—one that affects poorer families more strongly—and one only a minority of states levy.
“[The tax] burdens those Virginians that are least capable of paying it the most,” he said.
The proposal to eliminate the state’s 1.5% grocery tax has some transportation advocates worried—a half-percent of that tax goes to transportation, and there is no plan to replace it. That is expected to take more than $100 million a year out of transportation funding.
Youngkin also called for relying more on fossil fuels in Virginia. He is attempting to remove Virginia from the Regional Greenhouse Gas Initiative, a cap-and-trade agreement among states along the Mid-Atlantic and northeast, and which has been in place since 2009. The initiative has been associated with both economic growth in those states and reduced carbon emissions.
“One of the realities today in Virginia is, we import about 15% of our power from other states, and yet the Virginia Clean Economy Act mandates that we’re going to dismantle all of our fossil fuel generate generation, which is predominantly—the vast majority of which—is clean-burning natural gas, which we actually get right here at home,” Youngkin said. “And so we’ve got some real work to do here in order to reestablish a balance here.”
And with Virginians facing high inflation alongside high prices and shortages of some goods driven by supply chain issues, Youngkin said he wants to put new emphasis on existing programs to put locally-grown food on tables.
“We actually have two big programs in Virginia, Virginia’s Finest and Virginia Grown, and we want to have agriculture that is, in fact, grown and produced in Virginia delivered to Virginia tables,” Youngkin said. “And if we can shorten the supply chains, and eliminate the grocery tax, we can in fact reduce the price of groceries that all families have to pay.”