The inflation challenge facing America's governors has coincided with a somewhat opposite trend: state budgets are flush after a period of better than expected tax revenues and ample coronavirus assistance from Washington, DC.
Governor Glenn Youngkin R-VA, who is one of many governors in that situation, says his budget forecast shows $15 billion more than expected and that windfall can fight inflation.
The governor signed a budget this week with a mixture of tax cuts and spending increases, and he highlighted those changes during a wide-ranging conversation with Yahoo Finance spokesman Andy Serwer Thursday. The changes include $4 billion in tax relief and new spending on education, law enforcement, and behavioral health.
Youngkin said we have been overtaxing Virginians. He said that his constituency is facing the silent thief that is inflation when they are hard-working folks trying to make ends meet, and this is a way to let them have some of that money back. Youngkin's budget eliminates the state's 1.5% state grocery tax, doubles the standard deduction for state taxes, gives every taxpayer a rebate and cuts taxes on retirement income for veterans.
Youngkin says that this is a chance for us to rebalance what has been a really lopsided overtaxation environment.
The governor is pushing for a gas tax holiday in his state, but has been stopped in that effort by Virginia legislators who have repeatedly tabled the idea.
Democrats control the commonwealth senate and have repeatedly rejected a tax holiday. One of Youngkin's own party, State Senator Emmett Hanger, has bucked the governor to vote against it.
Youngkin said on Thursday that he is being stymied by Democrats, and that he can afford this. The White House is calling for a three-month suspension of the gas tax. This isn't politics - this is a chance for us to do the right thing for Virginians. A number of powerful figures in Washington, from Senate Republican leader Mitch McConnell to House Speaker Nancy Pelosi to moderate Sen. Joe Manchin D-WV, have expressed skepticism about a federal gas tax holiday. Some other governors have pushed for it at the state level.
Gov. Gov. Gretchen Whitmer D-MI has advocated for dropping gas taxes, while all over the political spectrum, including Gretchen Whitmer D-MI. Ron DeSantis R-FL recently signed a series of tax cuts that include a one-month gas tax holiday in October.
A number of other states from Connecticut to Maryland have implemented their own plans.
Youngkin believes these moves are the key for his state to fight inflation and avoid a recession. He said that this is why people are saying, hey, I want to stay in Virginia.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.