The General Assembly ended their 2022 session in Richmond this weekend, pushing final decisions on a number of big items — including the commonwealth’s two-year, close to $160-billion budget — to a special session.

But lawmakers in the Republican-controlled House and Democrat-controlled Senate say they are optimistic about coming to consensus on the budget and other measures.

“The session may have ended, but the work isn’t done,” said Republican Whip Michael Webert (R-Fauquier). “House Republicans are eagerly awaiting Governor Youngkin’s call for us to return to Richmond to finish our Constitutional responsibility of passing a budget. We came here in January to do the job, and we’re anxious to complete it.”

“I’m encouraged with the recent progress on the budget and I’m grateful to the members on both sides of the aisle for their efforts,” said Gov. Glenn Youngkin in a statement on the adjournment.

Legislators will return to Richmond to vote on a final budget once House and Senate negotiators reach consensus, which could come in just days.

A number of other bills did pass during the 60-day session, and both political parties are taking the opportunity to trumpet their successes. Senate Democrats, who had promised a “brick wall” to protect their work in the previous session from Republican rollbacks, pointed to successes in protecting access to abortion and a historic expansion of voting rights. They also cited holding back Republican attempts to roll back gun safety and create more charter schools. House Republicans, meanwhile, talked up their successes in ending school mask mandates, giving parents notification of sexually explicit material in school classrooms, and providing tax rebates.

Elected officials across Northern Virginia have been watching the action in Richmond to gauge what implications there might be locally, even as they work through their own budget processes.

“We are still pretty anxious and waiting to see where the budget lands,” said Arlington County Board Chair Katie Cristol, a Democrat. She called the results from the session “a mixed bag.”

There are several significant decisions left to be hammered out, many of which will have direct impacts on local governments and residents in Northern Virginia.

The two houses of the legislature have yet to agree on the extent to which they will support Gov. Glenn Youngkin’s signature tax cuts. Any reduction in tax revenue could affect local transportation and education funding, in a year when both parties are emphasizing their support for schools and teachers.

In addition, there are two versions of a bill designed to lure the Washington Commanders to a new stadium — which some have called a “mini city” — somewhere in Northern Virginia. If the deal happens, the pricetag for taxpayers could total $350 million across several decades. And it’s also not clear whether Youngkin’s quest to pull Virginia out of the Regional Greenhouse Gas Initiative, a carbon-pricing market — will succeed.

Tax cuts 

The biggest sticking point between negotiators from both chambers has been their approach to tax cuts for Virginians. The House bill adheres to Youngkin’s campaign promise to double the standard income tax deduction to $9,000 for individual filers, a move which would cost the state an estimated $2.1 billion in lost revenue over the next two years and $1.3 billion in the next two-year budget, according to the Commonwealth Institute.

The Senate bill makes no such change, and so has more revenue to work with in funding other priorities, like education spending.

Both sides have already agreed on a Youngkin-backed proposal to give individual filers a tax rebate of $300 (joint filers will get $600).

Another signature proposal from Youngkin is ending Virginia’s 2.5% tax on groceries, an idea that has received some bipartisan support — the tax is commonly regarded as regressive, falling heaviest on lower income residents — but only up to a point.

The Senate legislation, like the original budget proposal from outgoing Democratic governor Ralph Northam, would nix a portion of the tax, the 1.5% that goes into state coffers and funds education spending and transportation spending. But it would leave the 1% portion of the tax that goes directly back to localities. The House version would get rid of the grocery tax entirely.

Both chambers have built in (different) mechanisms to restore the school funding that could be lost by ending part of the tax, but neither has come up with the money to replace the money for transportation.

Cristol said arguments that the state is flush with transportation funding from federal infrastructure spending and relief funds don’t hold up, because that money is mostly focused on capital projects, not maintenance. In Arlington, which maintains its own roads, that could mean less money for things like repaving projects. And she’s concerned about the impact on the region’s transit infrastructure, too.

“We know that transportation, that powers our economy,” Cristol said. “And in Northern Virginia, that is a huge quality of life issue, making sure that we can support transit alternatives, in particular for people having an option other than just sitting in that grinding traffic on 95 or 66.”

If the entire tax goes away, the 1% portion for localities would result in a $9 million budget hole for the county, Cristol says.

Fairfax County Board of Supervisors Chairman Jeff McKay also expressed concerns about the proposal. In a February letter to the county’s General Assembly delegation, he said replacing the dedicated education funding stream from the original tax with money from the state’s general fund that must be approved each budget year makes the funding “vulnerable to caps or reductions in future years.”

Fairfax County receives an estimated $60-70 million in revenue from the grocery sales tax, much of which goes to education spending.

McKay also expressed concerns about losing $135 million per year from the tax that goes to the state’s Commonwealth Transportation Fund, which pays for highway maintenance and construction as well as public transportation.

Education priorities

Republicans won back control of the House of Delegates and the Governor’s mansion in November with a campaign focused on reopening schools, parents’ rights, school choice, and ending “equity” as a focus in Virginia education.

So far, Republicans have a mixed record on achieving those priorities. Youngkin scored a big win when legislators passed a bill leaving the decision to mask children entirely up to parents. But Democrats mostly shot down his attempt to expand charter schools in the commonwealth, as well as an effort to outlaw the teaching of “inherently divisive concepts” in public schools (Youngkin used the language in an executive order directing state agencies to scrutinize materials and guidance offered to local school districts for evidence of so-called “critical race theory.”).

Now, the partisan back-and-forth moves to the budget proposals. Both parties have said they want to increase education spending in general, including raising teacher salaries. The Senate budget proposal would give teachers a 5% raise each year, which would cost $751 million over two years, and tack on a $1,000 bonus to be funded by $137 million in federal pandemic relief funding.

The House version is more modest, giving educators a 4% raise and 1% bonus. It represents a $68.4 million reduction in state funding for paying teachers and other school staff, according to the Commonwealth Institute.

Cristol says she’s supportive of teacher raises, particularly given the stresses of the pandemic on educators. But she notes that most localities in Northern Virginia will be required to pay for most of the increases from their own budgets because of the way the state allocates education spending.

“It’s not just that we’re on the hook for some of the pay raises. It is the vast majority,” she says. “So if you look at the Arlington County Public Schools budget that the superintendent just proposed, of the total revenue that is paying for everything from teacher salaries through curricular materials to building maintenance, less than 14 percent of it comes from the state.”

On average, teacher pay in Virginia was more than 10% below the national average, although the commonwealth is close to the top of state rankings for median household income and cost of living, according to the Commonwealth Institute.

A new Commanders stadium

Another major piece of legislation still on the table after the General Assembly’s regular session is the incentives package designed to lure the Washington Commanders to locate their new football stadium in Northern Virginia, a project that could bring new visitors to the area for the team’s home games and become a hub for additional business, restaurants and retail as well.

The Senate and House have both passed separate, bipartisan bills that would create the Virginia Football Stadium Authority, a group that would be responsible for financing the construction of the new stadium, and defining how much public tax revenue related to the site would be redirected from state coffers to the construction.

The two chambers are now working to reconcile the bills to arrive at a final version. Earlier versions, particularly in the Senate, had defined the “facility” broadly — potentially opening the door for public bonds financing more than just the stadium construction itself — and had also not set a cap on the amount of tax revenue that could be diverted back into the project. Negotiators have clarified both of those points, arriving at a $350 million cap on tax revenue and a stricter definition of what can be financed under the deal, according to reporting from The Washington Post.

There are still some discrepancies to iron out, however, according to the Post. The Senate version would route sales tax revenue and some personal and business income tax revenue back into the stadium project; the House version would only put sales tax revenue back into the project. The House version would also require that the Commanders reinvest at least half of the proceeds of the lucrative sale of the naming rights back into the project to cover debt service.

Youngkin has supported trying to bring the Commanders to the commonwealth, and it’s received bipartisan support in the General Assembly, but others — including Northern Virginia Congressman Don Beyer — have criticized it, suggesting that such projects for wealthy sports teams shouldn’t be made possible through publicly-funded bonds.

“Super-rich sports team owners like Dan Snyder do not need federal support to build their stadiums, and taxpayers should not be forced to fund them,” Beyer said in a statement. “Billionaire owners who need cash can borrow from the market like any other business. Arguments that stadiums boost job creation have been repeatedly discredited.”

Beyer is one of several leaders on Capitol Hill seeking to pass legislation that would do away with such incentives for building stadiums. Some lawmakers also point to the culture of sexual harassment and discrimination within the Washington team and throughout the NFL as a reason to deny public support for stadium construction. Team owner Dan Snyder is also facing allegations that he sexually harassed employees, including a former cheerleader. State Sen. Adam Ebbin (D-Alexandria) and Del. Marcus Simon (D-Fairfax) both attempted to attach language to the legislation that would have made public funding conditional on transparency from the Commanders and the NFL about investigations into sexual harassment and sexist workplace culture.

Both Maryland District leaders are also vying for the team; in Maryland’s case, that means keeping the Commanders in Prince George’s county. The Commanders are contractually obligated to play at FedEx Field until 2027.

Climate

One major source of partisan disagreement during the regular session has been Virginia’s approach to tackling climate change. While some legislation passed — a measure to incentivize natural gas utilities to work to recapture their own methane gas emissions received bipartisan support — Democrats and Republicans disagreed sharply on many others. Senate Democrats rejected Youngkin’s nomination of ex-Trump EPA secretary and former coal lobbyist Andrew Wheeler to a cabinet post, a rare piece of pushback that led to several rounds of retaliatory actions in the House and Senate. He has since been appointed advisor to Youngkin, according to The Washington Post.

Youngkin made promises on the campaign trail to remove Virginia from the Regional Greenhouse Gas Initiative, a carbon market among 11 states in the Northeast and mid-Atlantic. In the market, carbon producers pay for “allowances” according to how much carbon they put into the atmosphere, and the money goes back to the states. Virginia received $74.2 million from the program this year, which it will put towards flood preparedness and energy efficiency in low-income households.

That translates to real money on the local level, says Arlington’s Cristol: the county was able to weatherize 163 housing units using $2 million that came from carbon market allowances.

Cristol voiced concerns about pulling out of the program.

“Not only is it a total backing away from commitments to addressing climate change at a time when it should be more urgent than ever, but it will also harm some of the most vulnerable Virginians,” she said.

Senate Democrats defeated a bill to pull Virginia out of the carbon market, but The Virginia Mercury reports that Youngkin and Republicans are still exploring ways to end the commonwealth’s participation in the program, through proposed language inserted in the budget or possibly via executive order, though whether he has the power to do so is not clear.