(The Center Square) – Gov. Glenn Youngkin on Wednesday presented his final proposed state budget to Virginia lawmakers, pointing to strong revenue growth, saying the commonwealth has room to fund core services while continuing tax relief for Virginians.
Youngkin delivered the proposal during a joint meeting of the House and Senate budget committees, marking the last full biennial budget he will introduce before leaving office next month. Democrats control both chambers of the General Assembly, and Gov.-elect Abigail Spanberger will ultimately sign the budget lawmakers adopt.
The proposed budget includes $730 million in tax relief and does not rely on new or increased taxes, according to administration officials. General fund revenues are running well ahead of expectations, with collections about $484 million above forecast through the first five months of fiscal year 2026.
Youngkin warned lawmakers against shifting Virginia’s fiscal approach as control of state government changes next year.
“My friends, Virginia is leading,” Youngkin said. “Don’t allow her to become California or Illinois.”
He said cutting taxes remains the most direct way to address cost-of-living pressures.
“This has been, and will continue to be, the most direct way to address cost-of-living concerns,” Youngkin said. “You should cut taxes, not raise them or create new ones. It’s completely unnecessary and bad for Virginians.”
Virginia operates on a biennial budget cycle. In odd-numbered years, the governor introduces a two-year spending plan ahead of the legislative session. Lawmakers then revise the proposal during the session, with final passage typically taking place in the spring before the budget takes effect July 1.
Administration officials said the budget is built on a conservative revenue forecast that assumes roughly 3% annual general fund growth, even as actual collections continue to exceed projections. Through November, general fund revenues were up 5.2% year over year, driven largely by growth in individual income tax collections. Sales and use tax revenues were also up 5.8% year to date.
Youngkin said the cautious forecast is intentional.
“This leaves meaningful upside for the next administration,” he said.
The proposal would lock in several tax changes that were previously set to expire, including higher standard deductions and a more generous refundable earned income tax credit.
It also aligns parts of Virginia’s tax code with federal law, eliminating state taxes on tips and overtime pay and allowing deductions for certain car loan interest.
Youngkin said the combined effect of those permanent and temporary tax changes adds up to roughly $9 billion in tax relief over multiple years.
On the spending side, the budget increases Medicaid funding by $2.6 billion over the biennium, bringing total program funding to about $59 billion. It also adds $544 million in new general fund support for public education, including continued funding for support positions, bringing total state education investment to about $22.8 billion, or roughly $23.8 billion when early childhood funding is included.
The proposal also authorizes nearly $2 billion for capital projects and long-term maintenance, supported through a mix of cash funding and bonding backed by Virginia’s AAA credit rating.
