Category Archives: General Assembly

Complex Digital Sales Tax Worthy of Veto

By Steve Haner

Pick any member of the General Assembly at random, stop them in the grocery store for a chat, and quiz them about the digital sales tax they approved a week ago Saturday.  It will quickly become clear that most had no idea what they were voting for when they approved it.

What will the tax add to the cost of your Amazon Prime or Netflix? (For most, 6-7%.) Will the tax be collected on both the monthly fee and on anything extra you download (Yes) Will it add to the cost of preparing your tax to file online, your annual lease for Microsoft programs on your laptop or your security system program? (Yes, most digitally-based services will all be taxable to individuals, and many of them will be taxable to businesses. If you are doing something on a computer or phone that costs money, it is likely to become taxable.) 

Even for a business, if some software package its employees use includes a combination of online services, will it owe tax on the entire package? (Yes, unless the vendor is willing to break apart the bill, which many may refuse to do. That is because of the new language about taxing bundled services.)  If an out of state vendor does not add tax to the invoice, taxpayers will be required to calculate and pay it as a use tax, with auditors ready to pounce if they don’t.   

Think of engineering, law, banking, or medicine.  So many of their processes are now controlled by expensive software, most of which is about to be 6-7% more expensive.  At the shipyard in Newport News, paper blueprints and printed job instructions were replaced with tablets and digital design programs years ago.   Continue reading

Can the Governor Veto RGGI?

by Dick Hall-Sizemore

One of Gov. Glenn Youngkin’s top priorities has been to extricate the Commonwealth from participation in the Regional Greenhouse Gas Initiative (RGGI). One of the top priorities of the Democrat-controlled General Assembly has been ensuring that the Commonwealth participates in RGGI.

For those readers unfamiliar with the purposes of RGGI and how it functions, along with the pros and cons of membership, those topics have been covered extensively in this blog. See here, here, and here.  This article will focus on the constitutional struggle between the governor and the legislature.

Brief legislature history

In 2020, the General Assembly authorized the director of the Dept. of Environmental Quality (DEQ) to establish a market-based energy allowances trading program and the Governor to include the Commonwealth in RGGI. The Air Pollution Control Board (“the Board”) and the Governor exercised their authority to act, and Virginia became a RGGI participant on Jan.1, 2021.

When he took office in 2022, among the first executive orders issued by Gov. Younkin was one directing the DEQ director and the Board to begin taking steps to end Virginia’s participation in RGGI. The Board adopted the final repeal of the RGGI regulations in July 2023, to be effective at the end of the year. Environmental groups sued and those suits are still pending in court.

The next stage of this saga came as the new Democratic majority in the 2024 General Assembly adopted language in the budget bill prohibiting the use of state funds to “impede” the state from rejoining the RGGI and directing all relevant agencies to take steps to immediately rejoin the RGGI and continue participation. Although some Democrat legislators and environmentalists believe the language is vulnerable to a gubernatorial veto, court precedents and recent actions would augur a more favorable outlook on their account. Continue reading

Jefferson Institute Lists Bills Youngkin Should Veto

By Derrick Max

We have reached sine die of the 2024 General Assembly legislative session. During this session, over a thousand individual bills and a nearly 500-page biennial budget were sent to the Governor. All of this must be reviewed and acted upon by Governor Glenn Youngkin (R) before the April 17 reconvened session.

There may be hundreds of bills on the Governor’s desk worthy of his veto. Additionally, Democrats inserted partisan policy decisions within the budget in such a way that the Governor may need to veto it in its entirety. As Senator Creigh Deeds (D-Charlottesville) noted in his end-of-session constituent letter: “The budget includes items the Governor does not support, and some of those may be difficult for the Governor to veto because they are woven into the fabric of the budget itself. Speculation is rampant that he may opt to veto the budget, which would set us up for another prolonged budget debate.”

Governor Youngkin should not hesitate to use his veto pen liberally, including on the budget. As former Governor Terry McAuliffe (D) said, “The veto is not a decision I take lightly, but it is a necessary tool to prevent harmful legislation from becoming law. I will continue to stand up for the values and priorities of the people of Virginia by exercising this authority judiciously.” Governor McAuliffe had the highest number of vetoes in recent years when he faced Republican majorities in both chambers, vetoing 49 bills in 2017 alone and 120 during his entire term. Continue reading

Governor’s Budget Transformed

Gov. Youngkin addressing media about budget changes, with Senators Lucas and Locke looking on. Photo credit: Richmond Times Dispatch

by Dick Hall-Sizemore

In my almost 50 years of working around, and following, the General Assembly, I do not think I have ever seen the legislature take apart a governor’s budget bill to the extent that this General Assembly just demolished Gov. Youngkin’s budget.

The change that had the most impact was the jettisoning of the governor’s proposed tax package. Steve Haner has previously described the legislature’s actions (here and here). To summarize, the legislature rejected the governor’s proposed tax cuts, embraced his proposal to expand the sales tax to digital services, and went one step further by expanding the sales tax to cover digital services between companies.

The Governor’s proposal would have resulted in about $1 billion less in general fund revenue over the biennium. The move by the legislature was projected to increase general fund revenue by $1 billion over the biennium. That is a $2 billion swing in general fund revenue available for appropriation. And the Democrats in the majority on the budget committees of both houses were happy to use that extra money to spend on their priorities, primarily K-12. One only has to peruse the conference report to see a plethora of appropriation increases. Continue reading

The Sausage Factory Taxes the Digital Economy

By Steve Haner

The Virginia General Assembly has now jumped into the brave new world of taxing the digital economy, but the sales tax provisions it adopted in the budget conference report Saturday are not the same ones that appeared in earlier budget versions. The cabal of tax raisers in the secret final negotiation got creative.    Continue reading

Is Dominion-Stonepeak Deal a Partnership Flip?

By Steve Haner

Dominion Energy Virginia insists that its decision to sell a half-interest in the Coastal Virginia Offshore Wind project “won’t impact ratepayers.” The problem is, perhaps it should. Perhaps Dominion is creating additional value for its shareholders that instead should benefit ratepayers. Continue reading

Pot for Sale

Sen. Aaron Rouse (D-Virginia Beach)

by Dick Hall-Sizemore

The 2024 General Assembly has taken care of a piece of unfinished business. It has passed a bill to set up a framework for the sale of marijuana.

The 2021 General Assembly made it legal for individuals to possess a small amount of marijuana. However, there was not enough time to craft consensus legislation to regulate its sale. That task was delayed until the next year.

Del. Paul Krizek (D-Alexandria)

That plan was upended when Republicans won a majority of seats in the House of Delegates for the 2022 and 2023 sessions. Any bill to establish a framework to regulate the sale of marijuana was killed.

The result was a strange state of limbo. It was legal to possess marijuana, but it was not legal to sell it. A black market flourished. A Cannabis Control Authority (the Authority), with a governing board, was created, but had nothing to regulate. (When the term “Authority” is used in this article, the term includes the administrative agency and the governing board.)

With Democrats back in the majority in both houses in 2024, one of their top priorities was to legalize the sale of marijuana and create a framework to regulate it and tax it. Continue reading

Killing the Digital Goose for Its Golden Egg

Jared Walczak of the Tax Foundation

By Steve Haner

The last time the General Assembly made a similar mistake with the Virginia tax code was 20 years ago. It was 2004, and the complaints that business was not “paying its fair share” came from Republicans in the House. They introduced and quickly pushed through a bill that stripped sales tax exemptions from multiple categories of business. Sound familiar?

Twenty years later the only thing that has changed is that the bad idea is now coming from Senate Democrats. The anti-business rhetoric sounds the same. The sales or use taxes of up to 6-7% they seek to impose on business-to-business digital transactions (goods and services) will reach into every Virginia company, large and small. It will simply be passed along in higher prices. The only winners are their out-of-state competitors who have no such taxes in their states. Continue reading

Youngkin and Confederate Heritage

by Donald Smith

Does the Virginia GOP want the help and support of the Confederate heritage community? We should get a pretty good indicator this week.

Three bills just passed by the General Assembly will soon land on Governor Youngkin’s desk, if they haven’t already. They will remove the tax exemptions of the United Daughters of the Confederacy and the Stonewall Jackson Memorial House in Lexington, and stop further issuance of the General Robert E. Lee and Sons of Confederate Veterans license plates (but not recall existing ones). The governor will have only seven days to sign, veto, or let them become law without his signature.

That is plenty of time. Plenty of time for him to do the right thing, and veto them. Continue reading

Bait and Switch: Reform Reverts to Mo’ Money

By Chris Braunlich

Some years back, I ran into a friend, a Virginia Education Association unit chair, outside the General Assembly building, there to lobby on behalf of a state-wide teacher salary increase. Continue reading

Virginia Dems Have Their Panties in a Twist

by Kerry Dougherty

This is what triggers Virginia Democrats today:

There was an exchange at the Virginia Capitol between Lt. Gov. Winsome Sears, who presides over the State Senate, and Sen. Danica Roem of Prince William County.

Roem identifies as a woman, although Roem was born a man. The politically correct crowd insists that failing to use feminine pronouns for someone like Roem is “misgendering.” A sin invented by the left.

Roem stormed out of the Senate chamber after Sears addressed her as “sir.” Several other senators with their panties in a twist followed. Eventually Sears apologized.

Sheesh.

Look, my main problem with the trans movement is when children are involved. And the trans movement is actively recruiting kids. It needs to stop.

Beyond that, children shouldn’t be chemically castrated, sterilized with hormone blockers or have their body parts carved up because they’re confused. And no child should be allowed to pretend to be a member of the opposite sex in school without the permission of their parents.

Biological males should be banned from playing sports with biological females and they need to be forbidden to enter traditional girls’ safe spaces such as bathrooms and locker rooms.

That said, adults may do what they want. If a man wants to put on lipstick and wear a dress, fine.

What they cannot do is force the rest of us to play along. Continue reading

Democrats Proposal to Cut Sentences Would Undermine Public Safety, AG Says

Jason Miyares

by Hans Bader

On February 27, Virginia Attorney General Jason Miyares sent a letter to Virginia state legislators about a Democratic proposal to allow some violent offenders to receive sentence reductions previously available only to non-violent offenders.

Miyares asked legislators to prevent the proposal, passed by the House of Delegates on February 22, from going into effect, by adopting Gov. Glenn Youngkin‘s proposed budget item 390(R)(2).

“Cutting sentences for violent crime, especially in cases identified as a high risk for recidivism, is having a detrimental impact on public safety throughout Virginia,” Miyares wrote in the letter. “Aggressive sentence reductions for violent criminals and those with high risk for recidivism disregards past and future victims. Allowing such a practice is not justice, and it’s not safe.” Continue reading

Common Sense from Young Delegate Earley

Del. Mark Earley Jr.

by Gordon C. Morse

Occasionally, a member of the House of Delegates will stand up, speak to a matter of public interest and do so coherently. 

Del. Mark L. Earley Jr., R-Chesterfield, achieved this feat on Friday afternoon, Feb. 23, 2024, when he offered his thoughts on state Sen. Bill 212 — legislation that would sanction skill games, described by the Richmond Times-Dispatch as “electronic slot machine-like devices the General Assembly tried to ban in 2020.” 

While the measure cleared the House of Delegates on a 57-38 vote, Del. Earley spoke to a broader concern:  

Mr. Speaker, ladies and gentlemen of the House, I don’t want to take a lot of your time today. I know it’s Friday. But I just feel compelled to comment on this briefly. 

As we all know, in the last few years, really about a five-year time frame, we’ve have had a serious expansion, in a very short amount of time, in gaming and gambling here in Virginia. At this point, we got the lottery, we got casinos, we got sports betting, we got all sorts of things.

And now we have these gray games, skill games, whatever you want to call them, that have really sort of come here imposed upon us in a certain way, and now we’re dealing with it. 

Now,  don’t get me wrong, I certainly understand the arguments about how small business can potentially benefit from this, and I appreciate that. I am very sympathetic to it. 

But I do think that we have a different obligation, and perhaps a higher obligation, to consider what this means for our neighborhoods and our families. 

I’m concerned about turning every neighborhood store and every gas station into a mini casino.  Continue reading

The Camel in the Tent

In 2022, the General Assembly disregarded two long-standing principles of funding transportation projects in the Commonwealth.  Republican Gov. Youngkin followed down that path this year.

The General Assembly has dedicated sources of revenue to be used for transportation, with general government functions being financed by general income and sales taxes and other special funds. The revenue sources for transportation include taxes on gasoline and other fuels, motor vehicle licensing and titling taxes, operating licenses fees, and 0.5 percent of the 4.3 percent state sales tax. Localities in specified regions of the state are authorized to levy an additional 0.7 percent sales tax to be used for transportation. The concept of having funding for transportation and general government separated was so ingrained in the legislature that there have been attempts in the past to create a “lockbox” for transportation funds to avoid their being used for other general government purposes. The latest such attempt was in 2018.

By statute the legislature has stipulated broadly how transportation funding will be distributed: by system, by highway district, etc.  It has also authorized the issuance of bonds by the Commonwealth Transportation Board and other entities. However, with few exceptions, the main one being the widening of U.S. Rt. 58, the legislature has stayed away from designating the specific projects to be funded. It has left that function to the Board, relying on guidance from the Virginia Department of Transportation. It was a prudent choice. Otherwise, the funding of specific projects would be largely based on politics, rather than need. Continue reading

Governor May Get Two Different Nuclear Bills

Small modular reactor illustrated

By Steve Haner

A Virginia Senate committee voted Monday to approve a House of Delegates bill designed to finance a small modular nuclear reactor in Southwest Virginia, contradicting its own earlier vote for a much broader bill that had statewide application.

Two different bills on the same topic might now pass the Virginia Senate.  If the House does the same thing with the Senate bill, now alive in front of its Labor and Commerce Committee, Governor Glenn Youngkin (R) could have two very different bills to choose from. Continue reading