Over the last week, Democrats worked tirelessly with the Administration and our Republican colleagues in the General Assembly to reach a compromise on a tax and budget deal. As a member of the Appropriations Committee, I have been advocating for a fiscally responsible budget that also provides much needed investment back into Virginia.
Within the budget, we set aside additional funds to help maintain our valuable Triple A bond rating and ensure Virginia is prepared for any possible economic downturn. I am proud to have reached this compromise that will allow for tax certainty as we are in the filing season. Now, compromise means that we didn’t get everything that we wanted, but this is a deal that will benefit all hardworking Virginians, and creates fairness across all incomes.
First, it is important to note that the tax deal will provide conformity with federal tax law. Generally, tax conformity and tax policy are agreed upon separately. This year, however, Republicans used conformity as a political tool in the budget debate. Democrats have been fighting to address tax conformity separately since the very beginning of session. Without conformity, Virginia would have needed to make significant changes to our financial compliance system causing confusion and delays. Tax filers would not have seen their returns until later in the summer. Now, Virginians will be able to file their taxes in a timely manner.
Within this budget, Democrats advocated for tax fairness and this compromise rectifies some of the damage wrought by the Trump tax changes. This led to a 50 percent increase in the standard deduction, a change that benefits every single Virginia tax filer. Of the resulting $360 million in tax relief, half the benefits go to those making less than $40,000. For single filers, it will be increased by 50 percent from $3,000 to $4,500 and for joint filers from $6,000 to $9,000. These dollars will provide citizens the opportunity to save and spend back into the Virginia economy. Additionally, in October, we will be sending every taxpayer a check for $110, or $220 for joint filers. While this might seem like a small amount, and not the refund we were hoping for, every dollar helps families make car payments, rent, and put food on the table. In total, we will be returning over $970 million to taxpayers through a combination of refunds and tax policy adjustments.
Although this budget contains good investments, we missed a critical opportunity to significantly invest in K-12 education (we are still at pre-recession funding levels despite 25,000 more students than 10 years ago), environmental initiatives, and affordable housing. Unfortunately, these new investments were stripped from the Administration’s budget and returned to the original funding levels we approved last year in the biennium budget.
Additionally, we were unable to expand the Earned Income Tax Credit which would have put money back into the pocket of the most vulnerable among us. We will continue to fight for these investments in the budget conference and I am hopeful some will be included in the final budget. However, most of the funds that will be received due to the changes at the federal level will be placed into a reserve fund. Then, next year, we will have the chance to allocate these funds back into Virginia. If Democrats are able to win the majority in the General Assembly this fall, I am confident many of these investments will be enacted along with other bold, new initiatives to benefit our Commonwealth.
Even during these tumultuous times this deal proves that we can put aside our differences to work for the betterment of all Virginians. We continue to govern responsibly and fairly here in Richmond and I am humbled by your support and so very proud to represent you in the 44th district of Virginia.