The inflation challenge facing US governors has coincided with a somewhat opposite trend: collapsing state budgets after a period of better-than-expected tax revenues and ample coronavirus aid from Washington, D.C. .
Governor Glenn Youngkin (R-VA), one of many governors in this situation, says his budget forecast shows $15 billion more than expected – and the windfall can fight inflation, he said. he declares.
The governor signed a budget this week with a mix of tax cuts and spending increases, and he highlighted those changes during a wide-ranging chat with Yahoo Finance’s Andy Serwer on Thursday. These changes include $4 billion in tax relief and new spending for education, law enforcement and behavioral health.
“We overtaxed Virginians,” Youngkin said. He added that his constituency faces “the silent thief that is inflation when it comes to hard working people trying to make ends meet. [and] it’s a way of allowing them to recover some of that money.
Youngkin’s budget eliminates the 1.5% state food tax, doubles the standard state tax deduction, gives every taxpayer a refund, and cuts taxes on alumni retirement income fighters.
“It’s a chance for us to rebalance what has been a really unbalanced overtax environment,” Youngkin said.
“We can afford it”
The governor is also pushing for a gasoline tax exemption in his state, but has been stopped in that effort by Virginia lawmakers who have repeatedly floated the idea.
Democrats control the Commonwealth Senate and have repeatedly rejected a tax holiday. A member of Youngkin’s own party, State Senator Emmett Hanger, also pushed the governor to vote against it.
“We can afford this,” a frustrated Youngkin said Thursday, noting he was blocked by Democrats. “But then you turn around and see the White House asking for a three-month gas tax holiday. This isn’t politics – this is a chance for us to do the right thing. for Virginians.
In Washington, a string of powerful figures ranging from Republican Senate Leader Mitch McConnell to House Speaker Nancy Pelosi to moderates Senator Joe Manchin (D-WV) expressed skepticism about a federal gasoline tax exemption. But some other governors have pushed for it at the state level.
Governor Gretchen Whitmer (D-MI) has come out openly in favor of abolishing gasoline taxeswhile across the political spectrum, Governor Ron DeSantis (R-FL) recently signed a series of tax cuts that includes a month of gas tax holidays in October.
A host of other states from Connecticut to Maryland have implemented their own plans.
Overall, Youngkin says these measures are essential for his state to fight inflation and avoid a recession. “That’s why we’re finally seeing people say, hey, I want to stay in Virginia,” he said.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.
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