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

RICHMOND (AP) – Virginia Gov. Glenn Youngkin on Wednesday proposed a state budget plan to give tax breaks on tips and cars, measures his Republican administration touted as giving money back to middle- and low-income workers.

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

“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 Finance Committee. “And as a result of our collaboration, Virginia grows, Virginia leads and Virginia wins.”

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

Democratic House Appropriations Chairman Luke Torian said Wednesday that none of Youngkin’s proposed changes were off the table, clarifying that the state had about $2-3 billion in surplus funds. He also said the state would need to be strategic in its spending, especially if its economy takes a nosedive in the coming years.

“We will go through the governor’s presentation and we will see what is relevant — what we can do, what we can’t do,” he said.

Youngkin said $1.1 billion could be deposited into an auto tax relief fund from state surplus that would pre-fund the first three years. In his speech, he envisioned a permanent, refundable income tax credit of up to $150 for individuals earning less than $50,000 a year and up to $300 for joint affiliates earning less than $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 United States to take such action. Youngkin claimed the proposal would save $70 million, though some Democrats questioned whether such relief would be possible.

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

Echoing nationwide concerns about immigration, Youngkin emphasized that he would also like to cut off funding for 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 prison directors should be required to notify federal authorities of migrants’ arrests 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 anyone wants an illegal immigrant who has committed a serious and violent crime to be released back into society,” Youngkin said.

Youngkin’s proposal to deny funding to jurisdictions that ignore immigration detainees is likely to be held up by Democrats. But as lawmakers roll into a 2025 election year, immigration could be a key issue for voters across the state.

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