by Tyler Arnold
Virginia lawmakers will enter their next regular session in January as the state continues to record budget surpluses.
The commonwealth finished the last fiscal year with a surplus of nearly $2 billion and the state revenue collections continue to exceed expectations. Some economists are warning against using the excess money to increase spending during the legislative session.
“Virginia shouldn’t be looking to spend its budget surplus,” Adrian Moore, an economist and vice president at free-market Reason Foundation, told The Center Square. “With today’s economic uncertainty and the state’s public pension and other debts, Virginia should either put the surplus into a rainy day fund, pay down some of its unfunded pension liabilities, or even consider modest tax refunds to taxpayers struggling with inflation.”
Chris Edwards, an economist at the free-market Cato Institute, told The Center Square the state should look toward cutting taxes with the surplus money. He noted most states with a Republican governor have used surpluses to cut individual or corporate income tax rates.
“Virginia needs to get on board the tax reform express and pursue income tax rate cuts,” Edwards said.
Edwards suggested the governor should consider reforms to the Business Tangible Personal Property tax and the Business, Professional and Occupational License tax. The former collects revenue through taxes on business machinery and equipment, which he said discourages investments. The latter is a hidden tax, which he said undermines investments and hurts workers.
“Youngkin should cut these taxes to draw investment and jobs to Virginia,” Edwards added.
When the commonwealth recorded its large surplus to end the last fiscal year, the governor indicated it was a sign Virginians paid too much money in taxes. Last month, he reiterated his intent to cut taxes, but added that the state must be cautious because the country may be headed into a recession.
– – –
Tyler Arnold reports on Virginia and West Virginia for The Center Square.
Photo “Glenn Youngkin” by Glenn Youngkin. Background Photo “Virginia State Capitol” by Martin Kraft. CC BY-SA 3.0.
