Episode 82: What did the General Assembly accomplish this year?

The 2023 General Assembly session drew to a close last Saturday. And with divided majorities in the General Assembly, it was a little underwhelming. Despite a year of big, hot topic issues, little was accomplished on abortion rights, gun control, or even setting up a market for cannabis. So after six weeks, we find ourselves more or less back where we started. To understand the perspective from inside the GA, we talk with Senator Barbara Favola, who represents parts of northern Virginia. 

Things aren’t entirely over yet… lawmakers are still considering amendments to the state's two-year budget. The House and Senate have very different ideas of what to do with Virginia’s significant budget surplus. House Republicans want to give that surplus back to taxpayers through a billion dollars in tax cuts. On the other hand, Senate Democrats want to use the money to boost social programs that have been under-funded for many years. Particularly public schools. Here to walk us through this is Laura Goren, Director of Research and Education Policy at The Commonwealth Institute.

Find more information on Virginia’s budget process and how the two proposals compare on The Commonwealth Institute’s website.

Episode Transcript

Nathan Moore: This is Bold Dominion, a state politics explainer for changing Virginia. I'm Nathan Moore.

Virginia Senate passes gun control bills. Virginia House passes bill to require more steps before abortions. Virginia Senate passes marijuana sales and psilocybin bills. House of Delegates passes bill to restrict transgender student athletes. Those were some of the headlines here in the Commonwealth over the last month. And if you didn't know better, you might think that Virginia is on its way to some major law changes. And here's the thing about politics in Virginia in 2023--if you only read those headlines, you might have missed one key fact: none of those bills actually passed both houses. None of them are on their way to Governor Glenn Youngkin's desk for signature. None of them will become law this year. The Democratic-majority state Senate passed a number of center-left measures that died in the House of Delegates, and vice versa, with conservative measures that passed the House only to die in the Senate.

The 2023 General Assembly session drew to a close last Saturday. And with divided majorities in the General Assembly, it was an underwhelming session. Despite a year of big hot topic issues, very little was accomplished on abortion rights, gun control, or even setting up a market for cannabis. So after six weeks, we find ourselves more or less back where we started. But things aren't entirely over yet--lawmakers are still considering amendments to the state's two-year budget. The House and Senate have very different ideas of what to do with Virginia's significant budget surplus. House Republicans want to give that surplus back to taxpayers through a billion dollars in tax cuts. On the other hand, Senate Democrats want to use the money to boost social programs that have been underfunded for many years, particularly public schools.

Here to walk us through this is Laura Goren. They're the Director of Research and Education Policy at the Commonwealth Institute. And they're going to get into the details of each proposal and its impact on Virginians. But first we talked with Senator Barbara Favola, who represents parts of Northern Virginia. During the session, she proposed a bill that would have protected women's menstrual health data from police and government collection. Like so many bills, it passed the state senate, but died in the House of Delegates. She spoke with Bold Dominion producer Alana Bittner to talk about trying to get work done in a divided government.

Barbara Favola: You know, we didn't have a lot of consensus on major issues. That just was not the session for this because as you know, in 2023, the entire House of Delegates and the entire Senate will be on the ballot, so many bills came up that were, what people would say, designed for their brochure. Their campaign brochure. So those kinds of bills, of course, you know, went down in one chamber or the other. You know, we did find a lot of agreement on education funding--public education funding--which is great, and mental health services. But there was a lot of disagreement on gun safety bills, which the Democrats attempted to move forward with. You know, again trying to ban assault weapons following the federal law that didn't pass, safe storage of firearms--that didn't pass. So it was very perplexing to know that there were problems out there. Understand that in our communities, there's bipartisan support, both Democrats and Republicans were supportive of say safe storage bills or safe storage laws, but we couldn't get lawmakers to agree. Then, of course, the whole women's health care and the abortion access. Why disagreements on all of that?! And we had to be a brick wall on criminal justice reform and on the environment. And, you know, the Democratic Senate had to defeat rollbacks on [indiscernible] seven times. Seven different bills. We had bills to rollback electric vehicle standards, we had bills that would have allowed farmers to, you know, encroach on wetlands that had previously been protected- we moved all of that into a study. So it's...it has been a struggle. And it's unfortunate, because I really do think that there are some serious issues in the areas I discussed that need to be addressed.

Alana Bittner: I wanted to talk about your bill, Senate Bill 852. I was wondering, could you give listeners a rundown of what it was and how it fared in the General Assembly?

BF: Sure. This was probably the shortest bill in the General Assembly. It was three lines. But I am confident in saying it garnered the most attention. What my bill did was it prohibited the use of search warrants in accessing menstrual health data that might be contained on apps, or other electronic devices. I am a forward-thinking person, and I felt it was really important to put this protection in place. Your menstrual health data is very private. And I don't ever want to create opportunities for a woman to be criminalized for seeking an abortion, and having the government access menstrual health data could support that position. That's not where we are in Virginia. The Governor did not support my bill, but he did say he didn't intend to criminalize women for having abortions. But that's not enough of a guarantee for me. Nor is it enough of a guarantee for my constituents. I don't think any of us would have expected something as severe, for example, as what happened in Texas with a six-week abortion ban, which is essentially a total ban. And then individuals were actually empowered to report women. So that was nobody ever expected something as severe as that. So I am very much in the corner of being a long term thinker. I thought it was necessary. It certainly did garner a lot of attention. And I think in part because the Governor did come out in opposition to my bill. His argument was, it's setting a dangerous precedent by limiting a search warrant. And my counter argument is menstrual health data is very unique. And we would be hard pressed to say it somehow would set a precedent for other forms of information that police would want to gather. I again, believe it's personal and private information and should be protected.

AB: Well, thank you for breaking that down for us. The bill, ultimately, it didn't pass.

BF: It passed the Senate with bipartisan support, and it made it to the House. And then there was a House subcommittee that defeated the bill on a party line vote.

AB: I feel like maybe for our listeners who've been paying attention to this year's General Assembly, it might have been demoralizing to see this vicious cycle of bills passing one chamber only to fail and the other--in particular bills such as yours that are on hot button issues, such as abortion or gun rights. As a lawmaker going into this session--perhaps kind of expecting that not a lot will get passed--how do your priorities shift? What do your goals look like in a divided session?

BF: Well, you know, you probably have two strategies in play. You know, I don't think you should ever stop advocating for your constituents or the values you want to represent whether those bills pass or not. I think there's always an advantage to crafting a solution to real problems, and if you have to go through an educational phase with members and, you know, maybe suffer some defeats, I think that's okay. And then your other strategy is bills that you put in, you may scale back and start with a half a loaf with the hopes that you can get bipartisan support. So those two strategies, I think, are used to a greater or lesser degree by lawmakers.

AB: And then, I mean, on the flip side, there has been a lot of talk of what didn't get done, but there have been areas of consensus. One thing that kind of happened in the final days of the session had to do with Dominion Energy, which for years has been the largest campaign financer, kind of seems like the dark money of Virginia politics sometimes.

BF: Well, they've been very direct about their money. I mean, we don't really have, you know, dark money in Virginia, if you're talking about campaign contributions to candidates or to the respective caucuses, because we are required to report on that. So it's been very public. You know, who they have given to--I just want to get that on the record. This year regarding the Dominion bill, I think the bill that passed is a good deal. I did vote for it. In fact, it passed the Senate 40-0. The final conference report, you know, allows a rate of return for for Dominion for two years that is comparable to the current rate of return. It allows them to finance some projects geared towards renewable energy, you know, offshore wind projects, and then it expands the review of the SCC, which I think is really important because that is the consumer's checkpoint. The SCC is an objective body. Members serve on it across gubernatorial appointments. It is perceived to be, you know, a very technical body that really cares about the rate increases for consumers, a reasonable rate of return for the utility, and investments and reliability. I was very pleased to see a different structure, a different process for reviewing and making amendments to the Dominion bill, there were a lot more people at the table, I think the environmental groups had much more input than they've had in the past. In the past, we haven't had as big a table for as many voices to review the Dominion-initiated bills, and to actually make necessary amendments. All of that has been incredibly beneficial to Virginians. And I was really pleased to see it.

AB: Yeah, that's really cool. I was curious--Virginians using Dominion utilities, how will this affect them? What will they see on their bill that they get from Dominion every month?

BF: Well, you know, we're hoping that there will be, over the next two years, we're hoping there will be a reduction in rate, as well as investments in renewable energy sources. You may not see that on your bill, but you need to know that we have a policy, we're encouraging that, and we're taking steps to make that happen. It always takes time to right a ship, and I think--you know, through the work of Clean Virginia and other groups, League of Conservation Voters, the Sierra Club--so many groups have taken the time to grassroots coalition, to really delve into the detail of how we regulate Dominion and have come up with some incredibly helpful ideas for us. And we're making progress in a way that I think provides more transparency and more accountability. And those were my two goals: I wanted more transparency and more accountability. And I knew if if we could achieve those two goals, then ratepayers would probably benefit immensely, and that we could get to some of those public goals that we had always argued for--more renewable energy and diversity and still maintaining reliability.

AB: Next year's general assembly might look a lot different. We're about to have all 140 seats of the legislature up for election, as well as new district boundaries. I was curious, what do you expect to see in this upcoming session? Are you running again?

BF: I am running again. It would be my fourth term. I've served 12 years. Yeah, I'll be one of the old timers! I mean, we're losing a lot of experience. Dick Saslaw served for 44 years in the General Assembly [and] is retiring, Tommy Norment, who served for nearly 30 years, is retiring. You know, we're going to have more and more retirements. So there'll be a generational shift. And you know, there'll be a bit of a learning curve for a moment, but I think we'll be okay. There'll be new voices, it's always good to have a refresh. It keeps us in touch with where our constituents are, and you know, sort of cutting edge ideas. So, there's enough process in the operation of the General Assembly that nothing happens that quickly. Remember, a bill that's introduced, goes through a committee, sometimes a subcommittee, a full committee, gets to the floor. So there are lots of eyes on the bill, then transfers over to the other chamber. And that's a whole process, and all along the way lawmakers are looking at it. Advocates and experts are talking to us, we're taking public comment, you know, and then the next chamber goes through the same process, you know, another set of eyes, subcommittee, committee, goes to the full body. So, a bill has been looked at by lots of people in lots of different venues before it gets to the Governor. And then there's the whole executive branch review. So we're not going to be making transformational change, even though we'll have a lot of new players, but I'm hopeful we'll have a lot of new ideas that we'll get to think about and, you know, we'll have to educate ourselves on and, you know, maybe over time, we'll make some changes.

Nathan Moore: Barbara Favola represents parts of Northern Virginia in Virginia State Senate. You're listening to Bold Dominon, a state politics explainer for a changing Virginia. Visit us online at BoldDominon.org. And I want to tell you, we are always looking for good ideas to cover in future episodes. If you've ever had a question about state politics, something that didn't make sense and you just want somebody to explain it to you, well, let us know! Maybe we can help. You can shoot us an email at bolddominon@virginia.edu. You can always find us on Apple Podcasts, Spotify, or wherever fine podcasts are served up. Go ahead and subscribe! Hey, and leave us a nice review while you're there. We always like those! Bold Dominon is a member of Virginia Audio Collective online at virginiaaudio.org.

What should we spend our money on as a state? I mean, what should be Virginia's priorities? Does your answer lineup with House Republicans who want tax cuts, or with Senate Democrats who want to bolster investment in social services and schools? During the General Assembly session, the House and Senate failed to come to any agreement on any major amendments to Virginia's two year budget. Although, they passed a few interim amendments. There's still a chance to hammer out a compromise. Governor Glenn Youngkin may call a special session later this spring to do exactly that. Laura Goren is Director of Research and Education Policy at the Commonwealth Institute. They spoke with Bold Dominon producer Alana Bittner, about how the budget proposals diverge and what comes next.

Alana Bittner: To start off, can you break down the timeline here for us? Last year, the General Assembly couldn't decide on the budget until June. What's the timeline been looking like this year?

Laura Goren: So, in December, the Governor released his proposed amendments to the current two year budget. So what they passed back in June was a budget for the current year that we're in and the upcoming year. And they always come back and make revisions halfway through that. So that's the process that we're in right now. So the Governor proposed a set of revisions in December, and then the House and Senate each proposed their changes to the governor's revisions, and then they went through this process of rejecting each other's proposed changes and appointing what they call conferees, who are in charge of deciding on the final budget from the legislature. And after the legislature decides on its budget, that will then go back to the Governor who will have the opportunity to make additional amendments and line item vetoes.

So where we are now is the regular legislative session just ended. And they did not reach a deal on the budget during the regular legislative session. They did agree to make some small tweaks to the existing budget, basically implementing some of the things that they look forward to doing this summer and made some contingent appropriations around. So those are things like putting some money in our rainy day fund, helping to pay down our retirement debt, and then making a set of technical adjustments to funding for public schools based mostly on increases in enrollment. But again, these are basically just interim tweaks, and they're still working on deciding what to do with the main amendments to the state budget. There's a real opportunity this year to make some significant investments, there's about $4.5 billion in available revenue. So that's a lot of decisions they got to make, and they're still working on it.

And then more or less, the key difference between the two proposals seems to boil down to whether they accept Youngkin's $1 billion tax cuts and the Republican-led house includes those tax cuts, while the democratic led Senate includes none of those tax cuts, and instead uses that money to fund schools and social programs.

AB: I was thinking, since discussions on tax policy can sometimes feel pretty dense, I wanted to go through maybe the top three key tax cuts on the House side just so we can all more or less be on the same page. So, to start off with that--one of the things that the House budget proposal wants to do is increase the standard income tax deduction to $9000 for single filers and $18,000 for joint filers. What does that mean, and who does that benefit?

LG: Sure. So the standard deduction is what people take on their taxes if they're not itemizing, if they're not listing out their mortgage interest deduction and their state income tax deduction. So, most families, most individuals take the standard deduction, particularly since the federal deduction was increased recently. Increasing the standard deduction is something that will help middle-income taxpayers. It's relatively inexpensive compared to some of the other things in the tax package. It costs $95 million this year and about $200 million a year in following years, because of the timing of when it would go into effect. That's a change that would help a lot of middle-income taxpayers. Unfortunately, it leaves out a lot of lower-income taxpayers, who don't currently make enough to pay Virginia income tax, but they do pay a whole whole bunch of other Virginia taxes such as the sales tax, property taxes, excise taxes like gas tax. So those low-income taxpayers actually pay more of their income in state and local taxes than higher-income people do, but it's not in the form of the income tax.

So increasing the standard deduction would not help those lower-income taxpayers. We would certainly like to see something done for lower-income people as well, if we're going to do something on the standard deduction in Virginia could choose to further improve its Earned Income Tax Credit for low-income families, low-income working families who gets that, and that would be a way of making sure that more low-income taxpayers are not left out from that kind of tax change.

AB: Moving on to the second key component here, the House proposal also would like to lower top individual income tax rate from 5.75% to 5.5%. So what does that mean, and who does that benefit?

LG: Unlike the standard deduction that primarily benefits middle-income taxpayers, lowering the top individual income tax rate primarily benefits wealthy people. And that's because those are the folks who are currently paying the most in individual income taxes. So when we look at that proposed change to the individual income tax rate, it would cost about $333 million this year. And that cost would balloon into $1.5 billion in the upcoming two years. So it's also extremely expensive compared to the standard deduction change.

AB: Yeah, gotcha. And then one of the most contentious items is cutting the corporate tax rate from 6% to 5%. So what does that mean, and who benefits from that?

LG: The proposed reduction of the corporate tax rate is the single most expensive policy when we look at the impact of this budget cycle. And that's partly because the House and Governor's proposals have it go into effect sooner than they have the individual income tax changes go into effect. It would also result in a corporate tax rate that's lower than the top rate paid by individuals and families in Virginia., and again, it was $360 million dollars this tax year, and that's money that we certainly believe could be better used for our schools.

AB: Hmm, yeah. One thing I felt like the Commonwealth Institute breaks down really well, in some of their articles on the website is how it describes the Virginia's tax system is upside down or a regressive tax system. Could you expand on what that means and how these tax cut proposals kind of fit into that framework?

LG: Sure. Virginia's tax system relies fairly heavily on sales tax and gas tax and property taxes. And what that means is low-income families who pay the most as a share of their income on things like buying clothing and gassing up their car. Those are the folks who actually paying the most as a share of their income in Virginia. The income tax is a tax that is actually progressive and high income people pay more as a share of their income in terms of the income tax. So unfortunately, right now, Virginia does have an upside down tax system that relies heavily on the sales tax and other regressive taxes. And these proposed changes to the individual income taxes - particularly the cuts to the income tax rates for both individuals and corporations -those would just double down on the current upside-down regressive tax system and would make it even more unfair for low-income folks.

AB: On the flip side, the Senate's budget proposal includes none of those tax cuts. Rather they use that funding for social programs, with schools and education in particular. Can you break down the Senate's approach to school funding? Have they been allocating that billion dollars?

LG: The Senate uses the bulk of the money they save by rejecting the regressive tax cuts to invest in our public schools and make sure that students in every community can go to schools where teachers have the resources and support they need to provide a high quality education. So first and foremost, the Senate uses $271 million to fully lift the arbitrary cap on state funding for support staff. So, this is a limit that was put in place during the last recession, the Great Recession in 2009. They put this into place, basically as a cost saving measure for the state, and it stuck around and has cost Virginia schools hundreds of millions of dollars a year. And what we see is, in some communities, the local government has the resources to make up that difference and fund support staff on their own using their local tax base. Yet, in low income communities, both rural and urban, the local government can't afford to do that in the same way, and students are left without the support they need. So that's the most significant thing we see in the Senate budget that's not in the House Budget, or what the Governor proposed. The Senate also proposed additional physical and mental health staff, and this is what is called technically specialized student support staff. So, they use $57 million for this additional physical and behavioral health staff. They provide additional funding for reading specialists, and I think one other really important thing that the Senate does is they provide extra resources for the schools that have been struggling the most, particularly with a pandemic. So they provide an additional $37 million for the highest poverty schools. And they also provide additional teachers for English language learners. We know that in Virginia, English language learners get less help from the state than in most other places around this country. And as a result, the on the standardized test scores, English language learners in Virginia are way below their peers in other states. And that's not true for other students in Virginia. And that's because we're not providing the support that students need in order to learn English and thrive in their schools. So those are really important additional things that the Senate is doing in the area of K-12 education. They also provide $58 million this school year to fully hold schools harmless from the impact of the state calculation error. So this is a little bit of a hard thing to explain, but the State Department of Education made some errors in calculating how much local school divisions would get in the budget that was approved this last June, and then also when they calculated the impact of the Governor's amendments in December. As always, all school divisions were told they were going to get a certain amount of money, and that was more than was actually budgeted by the legislature in June or by the Governor this December. So the Senate says, well, that's not the school divisions fault. We should hold them harmless and make good and make sure that they are not impacted by this mistake that the State made. The House provides significantly less funding towards that area of holding the school divisions harmless, so that's another area where there's some differences between the two approaches.

AB: What's interesting is it feels like the background of these decisions are kind of like the worries of possible economic downturn on the horizon. I was curious, could you kind of explain how these budget proposals attempt to mitigate that? The differing approaches between the two proposals in how to address a possible economic downturn?

LG: Both approaches do a pretty good job of making sure that we are appropriately putting funding into our rainy day fund- that's the pot of money that the state saves up for when there are bad economic times. The budgets also both choose to use a fair amount of our available cash for capital projects rather than borrowing, so that's another way that each budget, each proposal is trying to make sure that we don't get ourselves into trouble down the road. They do, of course, differ in their approaches to tax policy, and the House proposal on tax policy, as well as the Governor's proposal do lock us into pretty deep corporate tax cuts, whether or not whoever new comes in as expected, whereas the Senate takes different approach and says we're going to use those available resources to finally dig ourselves out of the hole that we got ourselves into during the last recession, and start working on fulfilling our promise to our students to provide a high quality education.

AB: Now that they've brought these proposals together, the next step is consensus. Where do you expect to see compromise here, having analyzed these, what consensus do expect to see?

LG: We've certainly heard some talk about trying to meet somewhere in the middle in terms of tax policy, and, in particular, we've heard some discussion about how it might be reasonable for the Senate to accept the standard deduction change if it also was paired with something for lower-income tax payers. I think at the end of the day, the question is one of...do legislators believe that it's more important to be investing in education, health, or is it more important to be doing these tax cuts? And you know, they honestly could walk away at this point and not revise the budget. We are currently in a two-year budget that was passed in June. They do not have to amend the budget, and it is good that they made some technical amendments this last Saturday in order to do things like put some more funding into the rainy day fund, but at the end of the day, they don't, technically--there's not gonna be a shutdown if they don't amend the budget. Although, I would certainly expect to see them come up with something.

Nathan Moore: That was Laura Goren, Director of Research and Education Policy at the Commonwealth Institute. Thanks to them and Senator Barbara Favola for speaking with us today. My name is Nathan Moore, and I'm the host of Bold Dominon. Our producer and editor this week was Alana Bittner. You can find us online at bolddominon.org, and don't forget to subscribe! It's just a click away.