The incoming Youngkin administration and state lawmakers have proposed several major tax proposals to reduce taxes for individuals and businesses. These include one-time tax rebates, dramatically increasing the state standard deduction, eliminating the state and local sales tax on groceries, and pausing the recent increase to the fuels tax. While some of these policy ideas may have merit individually, enacting them without ways to backfill those resources would threaten the overall fiscal stability for the commonwealth and the well-being of our communities. To date, the incoming administration has not identified any measures to replace these revenues.
New analysis from the Institute on Taxation and Economic Policy (ITEP) shows that the incoming administration’s plan would reduce state and local revenues by about $2.9 billion at least—more than 3.5 times the combined annual General Fund budgets of the state’s Department of Health, Department of Behavioral Health and Developmental Services, and Department of Social Services, and more than 5.5 times the annual General Fund budget of the Virginia Community College System.