Joint Money Committee Speech

Joint Money Committee Speech

As Delivered

Joint Money Committee Speech

Keep Virginia Winning

Good morning.

Well, with just one week until Christmas, I hope that all of your stockings have been hung with care, and that in this most important Advent season, we are all joined together - regardless of our faith traditions - by a shared commitment to one another.

Lieutenant Governor Sears, members of my Cabinet, Chair Lucas, Chair Torian, Chair Watts, Members, and of course, incredibly-able staffs of the Money Committees, thank you for your leadership and your partnership.

I'm joined this morning by Virginia's First Lady, my amazing wife, Suzanne Youngkin -we can clap there.

I know that each of you will appreciate this truth: our service to the Commonwealth would not be possible without the support of our spouses, our families and our loved ones. And I want to thank at this time, everyone's support infrastructure that allows us to do the work that we collectively do.

It is such a joy to stand here today with shared credit for all of us to say simply: Virginia is roaring.

Over the past nearly three years, we have worked together to catapult our beloved Commonwealth to incredible levels of growth. It's been a true partnership between our administration and all of you.

Our collective bold actions are working.

Together, we provided generational tax relief, invested in record amounts in education, public safety and behavioral health.

We reopened Virginia's economy after a global pandemic, all while delivering surplus, after surplus, after surplus.

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

And this morning, I ask you to join me in continuing that work together.

My main point today is simple: Let's keep going. Let's keep Virginia winning.

When we started all of this in 2021, Virginia was bottom third in the nation in job growth.

More businesses were leaving than coming.

Over 23,000 small businesses were shuttered in 2021.

We had a 20 year high in murder rate.

Our fourth and eighth grade students had the largest learning loss in the nation in math and reading.

More people were leaving than coming to the Commonwealth from the other 49 states for nine straight years.

And today, because of our collective work, and recognizing there are moments along the way that we might not have agreed, everything is different.

This year, Virginia was named the Top State in America for Business by CNBC, and just this week, we were named by Business Facilitiesas state of the year, the best place to locate a business.

More Virginians are working than ever before in the history of the Commonwealth, over 250,000 more than three years ago.

Businesses have committed nearly $90 billion in capital to build factories, expand facilities, develop supply chains.

Companies, jobs and people are moving to this dynamic Old Dominion.

We've seen a 34% decline in murders in some of our most violent localities in just one year.

Chronic absenteeism is down.

Test scores are up.

And last year, for the first time in 10 years, we saw more people move to the Commonwealth than from away from the Commonwealth to the other 49 states.

Together, we can all be proud that Virginia is a place where people want to live and work and raise a family.

Now, it is this growth - this growth in good jobs with strong wage growth, this growth in business investment, this growth in-net population, in-migration - and our bipartisan, responsible budgeting that provides the foundation for a meaningful revenue re-forecast for the fiscal years, 2025 and 2026.

Now as a reminder, our current budget is based on a revenue forecast that we established in December of 2023, a time when the consensus outlook included a recession, a recession that did not happen.

In fact, actual fiscal year 2024 results exceeded that forecast by $1.7 billion and that included the additional $525 million we included in the common ground budget that we signed in May.

However, no changes to fiscal year 2025, and 2026 forecasts were incorporated in that Common Ground budget.

Indeed, when we left our GACRE meeting at the end of July, it was the overwhelming consensus that we should wait to reforecast until after the results of the election were known.

At our November meeting, with the national elections behind us, we collectively decided it was prudent to establish a new baseline forecast.

There is reason to be optimistic about our economic outlook.

Small business optimism is at a three-year high; consumer confidence is rising rapidly; foreign businesses are reshoring to America and Virginia; the stock market is strong; the Federal Reserve appears poised to reduce interest rates over the next year.

This backdrop further supports Virginia's ongoing strong performance.

Through November, revenues year to date were up 7.3% over 2024, and job growth and corporate investment continue to be strong.

In fact, just yesterday, we made the exciting announcement that Commonwealth Fusion Systems will build a multi billion-dollar fusion power plant right here in Virginia.

Therefore, I'm presenting this morning a reforecast for 2025 and 2026 that incorporates 3.2 billion of incremental revenue over the biennium, versus the Chapter 2 levels, which, again, were established back in December 2023. And of that $3.2 billion of incremental revenue, $2.1 billion is forecasted to be realized in 2025, and $1.1 billion forecasted to be realized in 2026.

This new December forecast reflects a 4.1% growth over 2024, followed by a 2.5% growth in 2026.

Again, this 4.1% growth rate compares to the 7.3% growth rate that we have already realized year-to-date, which means that as we stand here today, we are already $152 million ahead of this new December forecast.

With this strong foundation and with our ongoing commitment to work together, I firmly believe that we can build on our successes and Virginia will keep winning.

Now, to keep Virginia winning for Virginia families, we must continue to lower the cost of living, and there are three common sense components that I am including in my budget amendments this morning.

Together, we have provided Virginia families over $5 billion of tax relief - and yet, government tax receipts continue to grow.

I appreciate the sentiments expressed recently by Chair Lucas and Speaker Scott, both of whom voiced their support for additional tax relief for hardworking Virginia families. Together, the Commonwealth can make a clear statement that reducing tax burden so Virginians can keep more of their hard-earned money in their pockets is not a Republican idea, it's not a Democrat idea, it's just common sense.

Therefore, let's give Virginia families relief on the most hated tax in America since the tax on tea - the local car tax.

Today in Virginia, a typical family of four who has a car would pay on average $290 in what's affectionately called the car tax.

Standing here today, I will renew my call for us to work to fully eliminate the car tax. Recognizing that this might not be possible in this short session, there is an incremental step that we should take together to provide additional car tax relief.

Under my amendment, a family of four will be fully reimbursed with the Middle Class Car Tax Credit - a permanent, refundable, income tax credit, with a refundable income tax credit of up to $150 for individuals earning under $50,000 a year and up to $300 for joint filers with under $100,000 in annual income.

The cost of the middle-class Car Tax Credit will be covered for the first 3 years with a $1.1 billion deposit into a car tax relief fund, using the strength of the surplus of this year to fund ongoing tax relief for these worthy Virginians.

With the surplus we have, it's time for us to make another down payment in ending this most-hated tax on hardworking Virginians.

The second component recognizes Virginia has an incredible hospitality, restaurant and service industry.

Hardworking Virginians should keep every penny of the tips they earn through their exceptional service.

My proposal is very simple, no more taxes on tips. You earn it, you keep it. This reduces taxes on Virginians by $70 million a year.

Third, we must make the existing Virginia standard deduction permanent.

Currently, the existing standard deduction of $8,500 for single individuals and $17,000 for joint filers, is set to expire on January 1, 2026.

Failure to make the standard deduction permanent prior to January 1, 2026, would result in tax increases of $557 million in fiscal year 2026, and $1.2 billion in fiscal year 2027.

My friends, there is no reason to raise taxes on Virginians. We are running surplus after surplus after surplus. Let's make the standard deduction permanent.

We are also proposing to modernize the tax code by moving to market-based sourcing for income taxes paid by our service sector companies.

Under market-based sourcing, all service sales are sourced to where the corporation's market or customers are located. Market-based sourcing ensures that our out of state businesses are paying their fair share, and it protects in-state businesses from double taxation from market-based states.

This is pro-business, does not have a projected cost over time to the state, and targets the fastest growing sector of the economy - the service sector - and the jobs that come with it.

Also, all but 12 states employ market-based sourcing, and we expect knowledge-based work to account for 62% of future U.S. job growth. This is a winner for Virginia.

These steps will make our Commonwealth even more business-friendly, give hard working Virginians relief from the sting of inflation from these past few years and demonstrate clearly what is possible when we work together.

Now, that's important, because we need to keep this strong economy going with good jobs for young people. We must continue to unleash this unbridled opportunity that we are seeing across the Commonwealth, raise the bar for academic excellence, keep our children safe and support our military members and their families.

To keep Virginia winning for families, we must continue to press forward on what has been the most aggressive education-funding agenda in the history of the Commonwealth. And I want to thank all of you for the collaborative work here.

With the amendments I am offering today, which total to an additional $1 billion -our shared commitment to K-12 public education will exceed $22 billion over the biennium.

There's $290 million for school construction and modernization, which brings our total for the biennium to $700 million.

There's an additional $550 million in direct aid - money that goes right into our schools and our classrooms.

There's an additional $6.8 million for school resource officers and school security officers, bringing us to more than $50 million for the biennium.

We've included $50 million for schools that have been identified as needing the most help by our school performance framework.

And there's $110 million for English language learners.

I hope my actions during the past three years demonstrate how committed I am to strong, excellent public schools that produce strong, excellent students.

The work we have done together to boost teacher pay, drive higher school performance, expand funding and support for early childhood education and childcare, recognizing that a robust, accountable public school system with high expectations is essential for the future of Virginia.

I will continue to be committed to that, and I also want to empower lower-income parents with more opportunities for their children.

I know we all agree that no student should be denied the opportunity to pursue the education that meets their needs, and that's why today I am proposing a new $50 million Virginia Opportunity Scholarship Program.

K-12 students from families at or below twice the federal limit to qualify for free school meals, will be eligible to apply for a $5,000 grant each year to support their educational needs - tuition, uniform, books, supplies, fees and transportation - for an education at any private school in the Commonwealth of Virginia. These funds will support 10,000 students.

This scholarship program, funded by our revenue growth and not from a single penny of existing educational funding, would serve 10,000 Virginians out of our 1.2 million public school students.

More importantly, though, it would provide that in Virginia we can support opportunity in education and continue to support our public schools with record funding.

Our work to establish innovative lab schools in partnership with our institutions of higher education is absolutely paying off. To date, we have 15 lab schools, six currently open, nine opening in the fall of this next year, that have consumed the $75 million of current funds.

We have lab schools that are preparing kids to teach in underserved areas, lab schools that are focused on our health care industries where a student can start work as a radiation tech or go to medical school.

We have lab schools that are preparing students for a career in space, lab schools that are preparing students to code or work in cyber security. But our work is not done.

To drive new pathways for communities that have not yet been served, we have included $25 million of incremental lab school partnership funding to be put to use with our Historically Black Colleges and Universities. Last year, we had multiple applications from our HBCUs, and those applications should be funded.

I'm proud of our shared investment with our HBCUs since I took office, with the highest per-student investment in the last 30 years.

Expanding our lab school partnerships is the next step in demonstrating what we can do through these partnerships.

Indeed, Virginia is internationally recognized for our great universities and colleges.

We largely agree, however, that the cost of attending those institutions has grown too much, too quickly for Virginians.

Together, we have increased funding for higher education to levels not seen since the Great Recession.

And while we have included nearly $500 million in capital funds for higher ed, my amendments include no new operating funding for our colleges and universities and include a 2.5% cap on tuition increases.

I've been clear with our Boards of Visitors and Presidents, it's time for our colleges to cut the administrative bloat, find savings and get a handle on cost escalations - without asking taxpayers for more money.

One area where we must not sacrifice is our commitment to our military veterans and their families.

This summer, again, we worked well together to restore the Virginia Military Survivors and Dependents Education Program.

We will continue that work together, and therefore, I am proposing an additional $120 million, $60 million each year, to allow our heroes and their families to pursue their educational dreams at Virginia schools.

This historic investment also includes a sustainable funding mechanism, combining general funds already appropriated, with $60 million annually from the actuarial surplus amounts of the Defined Benefit 529 programs.

According to the projections from the State Council of Higher Education, this total investment will fully fund the VMSDEP waiver. We owe it to their families to deliver on the promises we have made to make higher education accessible and affordable

We are supporting hard working Virginians. More jobs, great education, and allowing them to keep more of their hard-earned money in their pockets.

To keep Virginia winning, we must continue to strengthen Virginia's economy.

To attract and train the best talent, my budget proposals this morning include an additional $13.9 million in funding for nursing and nursing recruitment and training programs; an additional $35 million to fund high school dual enrollment and career and technical education.

We need more good-paying jobs, more great companies that choose to locate and expand in Virginia. And so, building on our massive investment to date in site readiness, I am also proposing $50 million of incremental funding for business ready sites.

It is our investment into site readiness that allows Virginia to compete so effectively for the historic economic development projects, like our announcement last month at Berry Hill when we welcomed Microporous' 2,000 jobs and $1.3 billion investment in Virginia.

Business-ready sites drive and accelerate economic growth.

We must continue to back our law enforcement and drive safe communities.

In the last few years, every state has become a border state, and violent crime has impacted Virginia families.

Several localities and local jails in Virginia have implemented sanctuary policies, including ignoring orders issued by the U.S. Immigration and Customs Enforcement Agency known as ICE detainers, and neglecting to notify ICE prior to inmate release.

That's why I'm proposing that if any locality adopts a sanctuary practice -meaning a practice that impedes communications and cooperation, when an illegal immigrant who commits a crime in Virginia and is detained and is subject to an ICE detainer - they don't comply, they should lose their funding.

I would ask us all to put our constituents ahead of those who commit violent crimes and are subject to an ICE Detainer Order.

This should be common sense -I don't think anybody wants an illegal immigrant who has committed a serious and violent crime to be released back in the community.

We will keep Virginia winning as we deliver for Virginians the need for behavioral health care.

To date, we've invested $1.4 billion in Right Help, Right Now, and it has transformed the way we are serving Virginians. They are getting the right help when they need it.

We've seen substantial progress with more capacity, better services and lives changed.

I've always been clear: this is a three-year transformation program. We've been through two years. There's one year to go.

The Year Three efforts require that we further reduce the burdens on law enforcement, but also create safer, more appropriate environments for individuals in crisis to receive the care that they need.

After a successful pilot in Southwest Virginia, we are now proposing to add $35 million in funding to employ Special Conservators of the Peace, affectionately called SCOPs, across the Commonwealth to transfer custody while individuals are awaiting placement for care, and this will immediately put law enforcement officers back to work.

The average time when we started this journey together in 2022 that a sheriff's deputy spent in a hospital with a patient seeking a placement, was more than 50 hours.

While our expansion of the crisis system will reduce that need over time, we must provide relief to these law enforcement heroes now and get them out of the waiting room and back to work on the streets. SCOPs have proven that they can do that.

In addition, to renovate, repair and upgrade behavioral health facilities, we've included over $50 million for much needed work.

At the heart of a winning Virginia, is a healthy Virginia. Critically, we must always support mothers.

Today, leading causes of maternal death are cardiovascular disease and mental health conditions, along with cancer.

And while many rural communities and urban communities are maternal health care deserts, over 80% of maternal deaths are preventable, and that's why we're investing to expand perinatal health hubs, increase payments for OBGYN residencies, and launch a statewide maternal health education campaign.

These investments will support the healthcare heroes and hospitals who work to safely deliver babies, and it provides incremental support for access to doulas, midwives and those who care for mothers throughout pregnancy and postpartum -ensuring Virginia has healthy moms, healthy families and healthy communities.

We also will meet the required need for Medicaid.

My budget amendments this morning fully funds the official Medicaid and associated rate forecasts with over $687 million and also include $105 million for the Children's Services Act.

To keep protecting Virginia's natural resources, I'm proposing an incremental $50 million for the Richmond Combined Sewer Overflow Project, $17.4 million for additional wastewater, and $26.3 million for Ag BMPs.

And each time I have repeated my commitment to our Chesapeake Bay goals. We have made substantial progress over the past three years, and we will continue to drive to work to preserve this most cherish natural resource.

Finally, to keep Virginians working for Virginians, we must continue to drive efficiency and effectiveness in our state government, and therefore we must advance many IT projects that are needed to not put our state functionality at risk.

We're including over $227 million in our budget to address Virginia's technology debt by advancing critical projects, including the Integrated Revenue Management System at TAX -Folks, we need to make sure we collect our taxes efficiently and effectively -and The Department of Education's Student Testing system, which needs a material overhaul.

And we have also included $20 million of IT security to protect Virginia's data.

It's absolutely critical that our government is fortified and buttressed in order to serve our 8.7 million bosses, and especially as we bring our IT systems into the 21st century.

I think this is responsible government.

Let me lastly touch on one of our most recent examples of the collective strength in Virginia.

At the end of September, Southwest Virginia, specifically, was hit by its most significant disaster since 2011.

Week after week, I visited families and communities in Southwest Virginia in the wake of Hurricane Helene, assessing the damage that flood waters had ravaged over these communities, and candidly standing in awe of the grit and determination that they responded with.

Roads that had been washed out, houses were picked up off their foundations, stories of loss, of livelihoods for gone. And yet, neighbors helping neighbors, heroic rescues, churches partnering with other churches across Virginia -it's truly inspiring.

I've worked with our local delegation. I've worked with Senator Warner and Senator Kaine's offices, Congressmen Griffith and Cline, and every other of our congressional delegation. I've called and prodded the White House, the FEMA Administrator, the Secretary of Agriculture, the Forestry Service, and everybody else who will take a phone call from me. It has been a collective effort to ensure that we repair and rebuild these communities.

In my amendments, I've included $25 million from the general fund and $100 million from non-general funds to establish a permanent Disaster Assistance Fund, a fund that would be administered by the Department of Housing and Community Development. Let's call this a true Rainy Day Reserve Fund.

It is intended to allow them-the General Assembly-to assist families with housing and other critical needs who are the victims of natural disasters, beyond what FEMA and other federal resources, insurance or private donations can't meet.

With this reserve fund established, I fully expect that the General Assembly and our administration will work constructively together in this next short session to appropriate funds specifically for Hurricane Helene relief.

I know that together, we can rebuild stronger than ever.

And so, I end where I began.

What we are doing is working. Virginia is soaring, so let's keep Virginia winning.

We are now among the top states competing for jobs and opportunities. These budget amendments build on that success.

We must continue to reduce tax burdens on hardworking Virginians.

We must continue to invest in economic development.

We must continue to provide educational opportunity to all Virginians.

We must continue to support law enforcement and bolster behavioral health.

We must continue to unleash growth and opportunity.

And as I've said many, many times, this is a both/and moment.

We can collectively get this done.

I want to thank each and every one of you for your partnership. I look forward to this next session where we can keep working together to keep Virginia winning.

God Bless you and thank you.

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