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|FOR IMMEDIATE RELEASE · December 14, 2021 Office of the Governor Alena.Yarmosky@governor.virginia.gov|
|Unprecedented economic strength mean Virginia can invest for future and cut taxes ~ Governor proposes ending the state grocery tax, fulfilling 2017 campaign promise; providing earned-income tax credit for working people; offering one-time rebates ~ Working people need help, even as many upper-income professionals got ahead during pandemic ~|
|RICHMOND—Governor Ralph Northam today continued his ‘Thank You, Virginia’ Tour, announcing that unprecedented economic strength is enabling the Commonwealth to both invest in long-term priorities—by raising salaries for teachers and law enforcement, funding Historically Black Colleges and Universities at record levels, boosting outdoor recreation, and more—while also reducing taxes to help working people. The Governor noted that many working people have not experienced the booming national economy that has helped many professionals and office-based workers get ahead and build wealth during the pandemic. “When Virginia cuts taxes next year, it should be done in a way that benefits working people,” said Governor Northam. “Many professionals made it through the pandemic fine, as their work simply moved online. But workers haven’t been so lucky when their jobs require close contact with other people. Some jobs simply can’t move online—restaurant workers, early childhood educators, home care attendants, and others—and we all depend on the people who do this work.|
Virginia can help working people by eliminating the state grocery tax, providing one-time rebates, and giving a tax break to people who are working.” Governor Northam is proposing four changes to tax policy: Eliminating the state sales tax on groceries. Governor Northam first proposed eliminating this regressive tax on low-income individuals when he ran for Governor in 2017. Virginia’s unprecedented economic strength now makes this possible. The state grocery tax is 1.5%. Most states do not tax groceries. This proposal does not affect local revenues. Providing an income tax cut for working families.
Governor Northam proposed to make up to 15 percent of the federal earned income tax credit (EITC) refundable for eligible families, which will give a tax break to working families who need it most. The EITC reduces the amount that low- and middle-income working people owe in taxes. Making it “refundable” means people will get a refund from the state if they are working but earning income below a certain level. The amount depends on income level, marital status, and family size. This program was started at the national level by former President Richard Nixon, a Republican. The Governor proposed a similar plan in 2019.
Offering one-time ‘economic growth rebates.’ The Governor is proposing one-time tax rebates to everyone who files state income taxes in Virginia—$250 for individuals and $500 for married couples—so that everyone benefits from the Commonwealth’s unprecedented economic growth. Low- and middle-income working people will benefit from this the most. Governor Northam and the legislature last offered tax rebates in 2019, providing $110 for individual filers and $220 for married couples.
Ending ‘accelerated sales tax’ payments for retailers. When you pay sales tax at a store or online, the retailer collects it for the state, and then forwards the money along to the Commonwealth. But when the economy collapsed in 2008, the state began requiring many retailers to pre-pay these tax payments early—before they had even collected the revenue. This placed a burden on retailers, causing them to dip into their own pockets. Governor Northam is proposing to end this system. Together, these plans are expected to reduce state revenues a total of $2.1 billion. Most of this amount is a one-time reduction for the state’s General Fund, and $419 million is an ongoing obligation. All ongoing tax cuts will directly benefit working people through changes to the EITC and elimination of the regressive state grocery tax.
The Governor said his budget proposal also will put $1.7 billion into the Revenue Stabilization Fund, set aside $1 billion for the Virginia Retirement System, and allocate $2.8 billion for capital projects in state government and higher education buildings. “Virginia is able to take these steps now because our sound fiscal leadership has shaped a booming economy,” said Secretary of Finance Joe Flores. “These steps are tools to make sure that working people share in the prosperity.” “Virginia has been named the best state for business for three years running and we have a remarkably strong economy, but not everyone is benefitting equally,” said Delegate Lamont Bagby, chair of the Legislative Black Caucus. “This tax plan focuses on Virginians who need help and who have largely not benefited from our strong economy. This is the right way to help working people and provide equity in our tax policy.”
The Governor made the announcement at The Market at 25th, a community-driven grocery store in Richmond’s East End. Virginia’s Finances Are Strong
Under Governor Northam, Virginia’s financial reserves are at record levels. Governor Northam leaves office proposing more than $3.8 billion in financial reserves. That’s 16.8% of state revenues–and more than eight times the amount Virginia had in the bank when he took office. In 2018, those same reserves stood at just $440 million, so he set a then-ambitious goal to get to 8% during his four-year term. This is unprecedented in Virginia history.
Virginia closed Fiscal Year 2021—the pandemic year—with a record surplus: $2.6 billion. Unlike some other states, Virginia managed through the pandemic without cutting services, laying off workers, or borrowing to pay the bills.
Virginia has preserved a AAA bond rating since 1938, longer than any other state. Virginia shares this first place ranking with just 13 other states. When rating agency Fitch reaffirmed Virginia’s AAA in July 2021, it said: Virginia’s ‘AAA’ bond rating reflects its solid fiscal resources, conservative approach to financial operations and exceptional financial flexibility. The commonwealth’s strong fundamental economic profile provides a stable revenue base and solid growth prospects. Virginia also maintains a low long-term liability burden relative to economic resources. Virginia’s fundamental economic profile remains strong, with a diverse mix of industries and high wealth. Fitch expects the commonwealth’s economy to absorb the negative effects of the pandemic and return to a steady pace of growth over the near term. The commonwealth’s long-term economic growth prospects are solid, with above-average population growth and high education levels. Full Release
Office of the Governor Alena.Yarmosky@governor.virginia.gov
NORFOLK—Governor Ralph Northam today continued his ‘Thank You, Virginia’ Tour, announcing plans to invest an additional $1 million a year to support tuition assistance for Virginia National Guard.
“Our National Guard members make difficult sacrifices to protect our nation and the Commonwealth,” said Governor Northam.
“This investment aims to reward Virginia Soldiers and Airmen and encourage more people to join the program. This is a way to say thank you.” Between 400 and 500 members of the Virginia National Guard apply to its Assistance Program each year.
“We are excited to be able to offer more members of the Virginia National Guard assistance to pursue higher education,” said Acting Secretary of Veterans and Defense Affairs Kathleen Jabs.
“Guard members have been at the forefront of response to natural disasters, testing for COVID-19 early on in the pandemic, and answering the call during times of civil unrest in addition to deploying overseas for Department of Defense missions. This is a way for Virginia to show appreciation.”
The Governor proposes to change the program from an up-front direct award, issued before class begins, to a reimbursement model, issued after a Guard member completes a class. This is considered a best practice and is expected to increase the overall individual tuition assistance Guard members receive. It will also eliminate the requirement of the Department of Military Affairs to recollect funds from those who do not complete eligibility requirements.
“This initiative is a tremendous step in providing a key benefit to our troops and ensuring that we remain competitive in attracting talented men and women,” said Major General Timothy Williams, The Adjutant General of the Virginia National Guard. The Virginia National Guard Tuition Assistance Program has remained at its current funding levels since 2008 as tuition costs have risen at colleges and universities. With this proposed increase, the program will be able to provide approximately $4 million dollars to those who qualify.
Governor Northam announced the proposal in conjunction with the departure ceremony for the 1st Battalion, 1-111th Field Artillery Regiment at the Harrison Opera House in Norfolk. Approximately 300 soldiers are being deployed to the Middle East from units based in Norfolk, Hampton, and Hanover. About two weeks ago, more than 1,000 members of the National Guard from Virginian and Kentucky deployed from Bedford to the horn of Africa. More Virginia National Guard members are now deployed than at any moment since the surge of 2007.
In an email from Governor Northam it was announced that his Thank You Virginia Tour continues.
The governor’s proposed budget for the next two years includes $245 million for outdoor recreation.
The outgoing governor’s budget has to be approved before any of Northam’s allotments can be implemented.
The governor has already allocated funds for a raise for teachers as well as some public safety officials.
If the budget is approved it well significantly expand Virginia’s network of regional trails, state parks and the office of outdoor recreation as well.
This could help bring the Shenandoah Rail Trail closer to reality.
The trail hopes to connect Broadway to Front Royal and all points in between for biking and hiking.
The community support for the trail that will utilize the abandon rail that runs the valley has been very positive.
For more news from across the Shenandoah Valley, click here.
In an email from Governor Northam he announced more budget proposals as his Thank You Virginia Tour continues.
If the governor’s budget proposal is approved it will include the largest investment in public safety in the state’s history.
Under the proposal new Virginia State Troopers will see a 7.7 percent pay raise.
The starting salary of new correction officers will increase by 25 percent.
The average salary for entry level sheriff’s deputies and regional jail officials will increase by approximately 20 percent.
The governor’s budget proposal also includes significant funding to address pay compensation and raises for targeted officers and sworn personnel.
Virginia has already given 3 and 5,000 dollar bonuses to public safety officials this past year along with $500 bonuses in 2020 to certain officials.
These proposals are along with the 10 percent increase in teacher pay the governor announced Mon. Dec. 6.
For more news from across the Shenandoah Valley, click here.