Youngkin proposes tax relief on tips and cars in his adjusted Virginia budget plan

RICHMOND -- Virginia Gov. Glenn Youngkin proposed a state budget plan on Wednesday to provide tax relief on tips and cars, measures his Republican administration touted as giving money back to middle- and lower-income workers.

The proposal, which would amend the final year of the state's two-year budget cycle, also seeks to boost funding for schools, maternal health and disaster relief. An adviser for Youngkin said ahead of his speech that the proposed adjustments are fueled by surplus funds coming out of fiscal year 2024.

“We reopened Virginia’s economy after a global pandemic, all while delivering surplus after surplus after surplus,” Youngkin said in a presentation to the General Assembly’s money committees. "And as a result of our work together, Virginia is growing, Virginia is leading and Virginia is winning.”

Budget plans introduced by governors typically undergo revisions by the money committees before lawmakers vote. And with Democrats poised to keep control of both General Assembly chambers after special elections in January, Youngkin's priorities may likely be contingent on bipartisanship.

Democratic House of Appropriations Chair Luke Torian said on Wednesday that none of Youngkin's proposed amendments were off the table, clarifying that the state had roughly $2 billion to $3 billion in surplus funds. He also said that the state would have to be strategic in its spending, particularly if its economy takes a dip in years to come.

“We’ll go over the governor’s presentation and we’ll see what is applicable — what we can do, what we can’t do,” he said.

Youngkin said $1.1 billion could be deposited into a car tax relief fund from the state's surplus, which would pre-fund its first three years. In his speech, he envisioned a permanent, refundable income tax credit of up to $150 for people earning under $50,000 a year, and up to $300 for joint filers making under $100,000 annually.

“Let’s give Virginia families relief on the most hated tax in America since the tax on tea: the local car tax,” he said.

He also pushed for Virginia to eliminate taxes on tips, which would make the Old Dominion the first state in the U.S. to take such action. Youngkin argued the proposal would save $70 million, though some Democrats questioned whether such fiduciary relief would be feasible.

“My concern is that I read the legislation, there was no definition really, of what tips are, given that this is ground that hasn’t been plowed before,” Democratic Del. Vivian Watts said in the joint committee meeting. ”I look forward to a discussion before we act on any such legislation of how we define tips."

Echoing nationwide concerns surrounding immigration, Youngkin emphasized he would also like to cut off funds toward local entities that do not fully comply with U.S. Immigration and Customs Enforcement — an initiative he said would weed out sanctuary cities.

In his speech, Youngkin said local law enforcement, sheriffs and jail directors should be required to notify federal authorities of migrants’ arrest 48 hours before their release. His proposal comes after the governor has gone on national news networks, lamenting illegal immigration.

“This should be common sense. I don’t think anybody wants an illegal immigrant who has committed a serious and violent crime to be released back in the community,” Youngkin said.

Youngkin’s proposal to deny funds to jurisdictions that ignore immigration detainers would likely be held up by Democrats. But as lawmakers roll into an election year in 2025, immigration may be a key issue to voters across the state.

___

Olivia Diaz is a corps member for The Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.