The Virginia General Assembly has passed its long-awaited, much-debated state budget bill, which dictates how the state will spend close to $160 billion over the next two years.

The Democrat-controlled Senate and the Republican-controlled House couldn’t agree on a budget during the regular legislative session, which ended in March, leaving lawmakers to punt the budget deal and a number of other big pieces of legislation — including a possible incentives package for a new football stadium for the Washington Commanders — to a special session.

At the beginning of the special session, the two sides’ proposals were $3 billion apart. Republicans in the House backed a series of major tax cuts, many proposed by Gov. Glenn Youngkin on the campaign trail. Democrats in the Senate wanted a more moderate approach to tax policy and added spending for education and other social services.

Lawmakers involved in the negotiations characterized the final product as a true compromise. It gives Youngkin and his Republican allies several of their tax priorities — including a near doubling of the standard deduction for income tax — but also includes some Democratic wins, like a 15% earned income tax credit refund for low-income families.

The deal will end the state portion of the grocery tax, 1.5%, but keeps intact the 1% that flows directly to locality budgets — a dedicated revenue stream Northern Virginia officials said was important to keep. It will not eliminate the gas tax or set up a gas tax holiday. Youngkin had hoped to end both taxes entirely.

The General Assembly’s approved budget includes significant raises for public employees, including teachers, who will receive a 5% raise each year for two years plus a one-time bonus of $1,000.

“I am so proud of the incredible work my fellow budget conferees, House and Senate money committees staff, and all members of the General Assembly have completed on the spending plan approved today,” said Senate Finance Committee Chair Janet Howell (D-Fairfax). “We have been able to significantly increase funding for many high priority programs, focused on making wise investments in Virginia’s people and our future.”

This year’s budget negotiations were unusual in that Virginia is experiencing a significant surplus, flush with federal pandemic relief money.

“When politicians get their hands on one-time money, they like to spend it on recurring items. I’m proud to say that in this budget, we’ve done the opposite,” said House Appropriations Committee Chairman Barry Knight (R-Virginia Beach). “We’ve used money that will recur year after year for one-time items. The end result is not only a structurally-balanced budget that protects our AAA bond rating, but a budget that funds our priorities while simultaneously providing tax relief. No new general fund debt, no tax hikes, no higher fees. It’s a budget we can all be proud of.”

The budget passed the House 88-7 and the Senate 32-4. Many legislators who voted against it were Democrats who criticized the mostly closed-door process (budget conferees mostly met in small groups, avoiding open-meetings laws, and did not brief their colleagues on the contents of the final deal before passing the information along to The Washington Post and Richmond Times-Dispatch, meaning that some lawmakers first read the details of the deal in the newspaper).

Del. Marcus Simon (D-Falls Church) called it “opaque” and an example of “legislating through the budget,” or using a “must-pass bill” to push through other legislative priorities.

For instance, the budget bill includes a new criminal misdemeanor charge for possession of more than four ounces of marijuana outside of the home. (Virginia decriminalized personal marijuana possession in 2020, making it currently legal for adults to grow the plant and possess small quantities, but not to sell it.)

Other lawmakers said they were disappointed that the budget did not go as far as they hoped in funding to address gun violence. Del. Cia Price (D-Newport News) said the approved budget represented a 53% cut in Democrats’ original funding proposal. It does include $13 million over two years for two different efforts to cut down on violence. One is a grant program for local governments, nonprofits, and hospitals taking evidence-based steps to curb gun violence, such as suicide prevention programs, street outreach, and other violence intervention work. The other is a grant program for local governments and nonprofits to provide training and other resources to law enforcement responses to gun crime, plus violence intervention efforts like Operation Ceasefire that address gang violence.

The budget now heads to Youngkin’s desk, where he has line-item veto power to make final edits for the next week.

Meanwhile, the special session in Richmond isn’t technically over. The General Assembly has yet to finish negotiations on the incentives package for the new stadium, and there are signs that support for using public money to help fund the construction is dwindling in some quarters. That’s even as the Commanders have acquired the option to purchase land in Prince William County with an eye to a stadium complex.

Those are the politics. But what’s in the budget for Northern Virginia and its residents?

What’s happening to my taxes?

Virginia residents will see some significant tax relief coming out of the budget deal.

The budget increases the state’s standard income tax deduction for single filers from $4,500 to $8,000, and for joint filers from $9,000 to $16,000. (Nearly, but not quite, the doubling of the standard deduction pushed by Youngkin.) The increase in the deduction will end in 2026 unless it’s renewed, and there are conditions that could limit the increase if the state’s fiscal outlook gets worse.

Virginians will also be offered direct tax rebates, as much as $250 per single person and $500 per married couple — a plan first proposed by outgoing Gov. Ralph Northam.

Low-income families particularly stand to benefit from the portion of the budget that strengthens the state’s Earned Income Tax Credit, making 15% of it refundable for low-income Virginia workers. That means that if the credit exceeds the amount of money they owe in taxes, they will receive some of that money back from the state, in addition to not owing anything in tax.

The budget also includes increased support for the state’s Temporary Assistance for Needy Families (TANF) program and adds dental benefits for people on Medicaid. The Commonwealth Fund For Fiscal Analysis, a nonpartisan think tank, called all of these improvements “notable steps” toward supporting working families.

Youngkin’s proposal to lower taxes on pensions for retired military servicemembers over age 55 made it in, and will be phased in over the next several years.

“It is my hope that in the years to come, we can bring that age down, because we know that many military people, after 20 years of service, they can be in their early forties,” says Del. Elizabeth Guzman (D-Prince William), who was a co-patron on the bill. “So I don’t think that we should put an age [limit], period.”

We’ve heard a lot about education spending. What’s in this budget for schools?

Schools have received a heightened amount of political attention in Virginia ever since Youngkin arrived in Richmond. His campaign focused on perceived failures in Virginia’s education system and highly emotional debates over diversity and inclusion policies. As governor, Youngkin has maintained a similar — often divisive — vision for public education, emphasizing decreases in test scores, pushing for school choice, and ending a previous state focus on equity in schools.

Both sides of the political aisle promised record education spending and this year’s budget delivers, sort of. Del. Barry Knight (R-Virginia Beach), who led budget negotiations for the House, told The Washington Post the $19.2 million for public education is the largest such amount in the state’s history, including when accounting for inflation.

In addition to the raises and one-time bonuses for educators, the budget also expands the number of non-educator support positions the state will help localities pay for, to the tune of $272 million. $1.25 billion will also go to school maintenance and construction needs throughout the state.

Alexandria Mayor Justin Wilson is encouraged by the investments in school infrastructure.

“We were very, very pleased about something we have pushed for for a long time, which is for the state to finally get back in the game of dealing with school facilities,” he told DCist/WAMU.

Wilson says he’s disappointed, though, that money for school divisions with high poverty rates wasn’t more in-line with what outgoing Gov. Ralph Northam proposed. The added funds help school districts who serve a high percentage of students in poverty.

Funding for public schools is shared between the state and local governments. The funding split is calculated based on the relative wealth of different areas, which can disadvantage communities like Alexandria where the community in general is wealthy but the student population is much less so.

“We pay the highest percentage for our schools, never mind the fact that we have a school system where 61% of our students are on free and reduced lunch,” Wilson told DCist/WAMU.

Wilson said he was pleased to see the raise for educators included in the budget, but noted that Alexandria will be required to pay for most of the state-mandated increase.

During budget negotiations, some Northern Virginia officials said they were concerned the House version of the state budget would leave them with less state education funding than expected, forcing them to either make up the difference themselves or else make cuts.

Prince William County School Board Chairman Babur Lateef feared the hole in the schools’ budget could be as large as $50-70 million, forcing the division to cut many of the kindergarten aide, special education aide, and counselor positions included in their original budget. Now Lateef is breathing a sigh of relief. While he doesn’t have the final figures from the state, it looks like the division will only be out $10-15 million, a hole he believes the board can adjust to without severely changing their original plans.

“With the revenues that we’re getting from the county, we think we’ll be okay to just stick to pretty much the budget we’ve proposed and passed,” he told DCist/WAMU.

A large sum in the state budget — $100 million — will go to support public lab schools run by universities, a pet project of the Youngkin administration, which has been generally supportive of school choice efforts. The partnerships with higher education institutions will be overseen by the Board of Education, and any money not used by the end of June 2024 will go back to the state’s general fund.

Critics note that previous attempts to set up lab partnership schools in Virginia haven’t succeeded, partly due to a lack of a dedicated revenue stream.

“They have failed to explain why there would be a different outcome this time around,” says Del. Guzman, in Prince William County.

The budget also includes an expansion of state support for early childhood education programs, according to Guzman. The Virginia Preschool Initiative will now serve families with incomes of up to 300% of the federal poverty standard, where before it only served families below the federal poverty line. It will also begin earlier, with 3-year-olds instead of kids four and above.

Guzman hopes the expansion will help more women in her district return to the workforce, instead of staying home to avoid skyrocketing childcare costs.

“I think that is exciting news for them,” she says. “We’re talking about more people becoming eligible.”

What big projects for Northern Virginia are funded in the state budget?

A “crisis receiving” center in Prince William County: Guzman and fellow lawmakers from the region successfully included $2.5 million for start-up costs for this longtime priority for county legislators. The center will help divert people in mental health crisis away from the hospital and relieve pressure on law enforcement to keep people in custody until a bed opens up.

“I know first hand that we have a lot of people dealing with the crisis in Prince William County that have to be waitlisted or many times sent outside of the county to get emergency services,” says Guzman.

Combined sewer project in Alexandria: The budget includes state support for the city of Alexandria’s big combined sewer system infrastructure project. It will modernize the city’s sewers, some of which date to the 1800s, and prevent them from spewing a combination of sewage and stormwater into the Potomac River during rainstorms. In total, the project will cost well over a half a billion dollars, with the state share at about $170 million in total, according to Mayor Justin Wilson. Much of the cost will be passed on to utility ratepayers, but state funding will help make the price hike not quite so dramatic.

A state mandate passed in 2017 requires Alexandria to finish the project by 2025.

“This is the largest infrastructure project the city has ever undertaken,” says Wilson. “We are doing it quicker than anybody has ever done it before, and we’re doing it quicker than anyone has ever done it before because the state told us we had to do it quicker than anyone has ever done it before.”

A new state park & historic site preservation: The budget funds a number of conservation, preservation and recreation projects locally. It allocates $1.4 million for four new full-time positions and other start-up costs to open Sweet Run State Park, a preserve of forested land, trails, and an organic farm in western Loudoun County near the West Virginia border. Wilson says Alexandria will also receive some state funding to help it restore, preserve, and maintain six historic African-American cemeteries.

“In order to pay the appropriate respect to the families and the descendants of the people who are buried in the cemeteries, it requires someone to step in,” says Wilson. “And in this case, the city is the only one left, really, who can step in and help address some of these issues.”