Virginia lawmakers approve budget, but governor warns that changes will be needed

RICHMOND, Va. (AP) — Virginia lawmakers wrapped up their 60-day legislative session Saturday by approving a two-year budget that includes pay raises for teachers and state employees, increases education funding and extends the state sales tax to cover digital services.

Notably missing was language that would have helped Republican Gov. Glenn Youngkin achieve one of his top priorities: a $2 billion development district with a new arena to lure the NBA’s Washington Wizards and the NHL’s Washington Capitals to Alexandria and give Virginia its first major pro sports teams.

The Democratic-led General Assembly rejected the proposal through two standalone bills, then refused to approve language in the state budget that would have paved the way for the project.

Youngkin, who touted the arena project as a potential economic boom for Virginia, could still revive it by calling a special session to start over with a new bill.

Democratic Sen. L. Louise Lucas of Portsmouth, who used her position as chair of the Senate Finance and Appropriations Committee to keep the deal out of the budget, said she opposed the project largely because of its reliance on bonds backed by the state and city governments.

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This year’s legislative session is the third since Youngkin took office, but it’s the first time he has had to work with both a Senate and House of Delegates controlled by Democrats.

Some Democrats complained throughout the session that Youngkin was unwilling to compromise.

“He’s going to find out that he has to treat us like equals,” Senate Majority Leader Scott Surovell said. “He has to treat us with respect. He’s going to have to negotiate with us and not dictate to us.”

Youngkin made it clear he is not happy with the budget, calling it “backward” and saying it needs “a lot of work.”

The budget approved Saturday excludes many of the priorities Youngkin included in a proposal he submitted in December. Lawmakers stripped out his proposal to lower income tax rates and raise the sales tax but did include his proposal to expand the sales tax to cover digital services, including purchases of streaming subscriptions, cloud storage and online downloads.

Teachers and state employees will get 3% raises in each of the two years covered by the budget.

In addition to the budget, lawmakers have sent Youngkin more than 1,000 other pieces of legislation. The governor can sign or veto bills, let them become law without his signature, or seek amendments. The General Assembly will reconvene to consider those proposed changes April 17.

Three years after Virginia became the first Southern state to legalize marijuana in 2021, lawmakers approved legislation this year to allow recreational retail sales of the substance to begin in 2025.

It’s not entirely clear how Youngkin will act on the legislation. He has not explicitly threatened a veto but has been vague on the issue for years, saying his focus was elsewhere or that he just wasn’t interested.

Another piece of legislation that passed both chambers would legalize skill games, the slots-like betting machines that proliferated in businesses around the state before an on-again, off-again ban took effect. The bill would tax and regulate the devices, which are also known as gray machines because of the murky area of the law in which they previously operated.

The skill games debate is a rare issue that doesn’t split along partisan lines, and lawmakers have gone around and around on it for years. Youngkin’s press office previously told the Virginia Mercury it had “serious concerns” about earlier versions of the bill. He did not respond to a request for comment about the legislation after it passed the General Assembly earlier this month.

Lawmakers also approved raising the state hourly minimum wage from $12 to $13.50 next Jan. 1 and to $15 the following year.

Republicans cited as a victory the defeat of the so-called second look bill, backed by Democrats, which would have let people with lengthy prison terms petition a court for sentence reduction after they serve 15, 20 or 25 years, depending on the crime.

This is the third consecutive year that a second look measure failed.

House Minority Leader Todd Gilbert said the bill “would have given every single offender — including violent offenders, sex offenders, everything you can imagine ... the opportunity to petition for a second sentencing event.”

Youngkin took final action on 84 pieces of legislation Friday, signing 64 bills into law and vetoing eight others, including one adding adding more restrictions on firearms transfers.

The 64 bills Youngkin signed had bipartisan support. One enshrined the legality of same-sex marriage in Virginia, while another prohibits public universities from giving preferential treatment in admissions to relatives of donors or alumni.

Among legislation he vetoed was a bill requiring the commissioner of elections to rejoin the Electronic Registration Information Center, an interstate data-sharing compact aimed at fighting voter fraud that Virginia withdrew from last year.