Youngkin introduces budget plan to eliminate tax on cars and tips

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

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

“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 money committees. “And as a result of our work together, Virginia is growing, Virginia is leading and Virginia is winning.”

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

Democratic House of Appropriations Chair Luke Torian said on Wednesday that none of Youngkin’s proposed amendments were off the table, clarifying that the state had roughly $2 billion to $3 billion in surplus funds. He also said that the state would have to be strategic in its spending, particularly if its economy takes a dip in years to come.

“We’ll go over the governor’s presentation and we’ll see what is applicable — what we can do, what we can’t do,” he said.

Youngkin said $1.1 billion could be deposited into a car tax relief fund from the state’s surplus, which would pre-fund its first three years. In his speech, he envisioned a permanent, refundable income tax credit of up to $150 for people earning under $50,000 a year, and up to $300 for joint filers making under $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 U.S. to take such action. Youngkin argued the proposal would save $70 million, though some Democrats questioned whether such fiduciary relief would be feasible.