eNews Special Edition – June 18, 2026
The Budget: After months of deep freeze, signs of a spring thaw
Thursday, June 18, 2026/Categories: eNews
The Budget: After months of deep freeze, signs of a spring thaw
The situation on the budget remains unpredictable and unsettling. But lawmakers responsible for pulling together the Commonwealth’s fiscal plan for the next biennium continue to emphasize that a budget will be ready before the end of June.
In that vein, at high noon on Tuesday, House and Senate budget conferees and their staff reportedly met tête-à-tête for the first time in months. Those conversations were rumored to extend throughout the afternoon. If true, that’s progress.
VML staff are continuing to pore over the newly minted amendments announced by the House at the end of last week and the Senate on Tuesday of this week. We’ve already noticed and highlighted in the sections that follow some of the major changes from the original budgets produced by the House and Senate. The list, which is not intended to be exhaustive, covers the following topics:
How did we get here…and where are we going?
For weeks, the House of Delegates planned to reconvene in special session on the budget on Thursday, June 18, presumably to begin finalizing the Commonwealth’s fiscal plan for the 2026-28 biennium that takes effect on July 1, 2026. Word on the street was that the Senate would assemble days later, on Monday, June 22. That all changed Tuesday afternoon.
As of this writing, the General Assembly’s legislative calendar shows no meetings on either day, no doubt because of the fluidity of budget talks that are showing signs of movement. If progress is being made, lawmakers may be clearing their calendars to allow the budget-writing committees and staff to do their thing. Let’s hope so.
That said, everything could change in the next 48 hours. But for now, it does not appear that lawmakers will be voting on a Conference Report agreed upon by House and Senate budget negotiators this week. For that, we continue to wait. Agreements on major legislation, like the budget, require discussion, debate, wheeling and dealing, and oftentimes that dreaded word among some policymakers – compromise!
What has transpired is that the House (last Friday) and now the Senate (earlier this week) generated separate proposals to bridge the budget gap that has divided the chambers since late February. In effect, the House and Senate have generated conference proposals that would typically be shared behind closed doors as part of budget deliberations. Likely frustrated by the delay in reaching an agreement, the House decided to revise their amendments and release them publicly; the Senate followed suit. Governor Spanberger came out in support of the House’s budget proposal late Friday.
Revisions to the House budget draw upon $1.5 billion in new general fund revenues identified by Governor Spanberger and her finance team in the last few weeks. A “Summary of Major Items in House Conference Proposal” can be found here. For much more detail, the new set of amendments the House is proposing can be found at this link.
Not to be outdone, the Senate unveiled its updated amendments to the introduced budget Tuesday. A summary presentation of the Senate’s amendments can be found at this link, while a more detailed set of the changes can be found here.
The “Senate Budget Proposal for Consideration” also draws upon additional revenues the governor has identified. However, because the Senate had already appropriated $500 million of these excess funds back in February, the Senate can only use $1.0 billion from these new totals.
In a concession worthy of note, the Senate’s budget proposal does not propose to sunset the sales and use tax exemption for equipment used in data centers. That has been the major source of friction, and dollars, between the House and Senate since the General Assembly adjourned in March.
In its place, the Senate offered up a Data Center State Impact Fee “upon every data center generator permitted by the Department of Environmental Quality (DEQ) based on the permitted generator’s rated capacity and emission standards.” The proposal is estimated to bring in $1.8 billion during the 2026-28 biennium, largely replacing the monies the Senate had anticipated by sunsetting the current sales and use tax exemption on January 1, 2027. Whether that movement satisfies the House remains to be seen.
As this prolonged fiscal dispute has lingered, we assured ourselves that a new budget would be completed by the June 30 deadline. We are still anticipating that it will happen if for no other reason than the consequences of stepping over that line are too dire.
Contact legislators soon with any concerns
A list of the House and Senate Budget Conferees are highlighted below. If you have concerns about items in either version of the new and improved budget amendments, it would be wise to let them or your local senator or delegate know as soon as possible.
VML Contact: Joe Flores, jflores@vml.org
Education
Three of VML’s top priorities were addressed in both versions of the current introduced budgets released on June 12 (House) and June 16 (Senate).
One Percent Local Option Tax for School Construction
The top VML priority is allowing statewide authority for all counties, cities, and two towns that own and operate school divisions to impose a sales and use tax of up to one percent dedicated to school construction if approved by referendum and ordinance. As a reminder, this authority, which is currently granted to nine localities, is permissive and no referendum is necessary. Although legislation failed to pass during the 2026 General Assembly Session, language was added to the Senate’s budget in early March.
As originally introduced in the Senate, authority was granted to impose the one percent with the stipulation that no other local funds or taxes could be lessened or supplanted.
The current budgets introduced both have this authority with slight differences.
The introduced House budget allows for the revenue to be used for previous debt services and to finance capital projects after the imposition of the tax. It also changes the timing of the referendum requirement. A new concept included in the House version grants counties and cities in planning district 8 (Northern Virginia) the authority to use this tax for transportation funding instead of school construction.
The current Senate version is identical to the originally introduced version.
Joint Subcommittee on Elementary and Secondary Education Funding
Following the Summer 2023 Joint Legislative Audit and Review Commission (JLARC) report on K-12 Funding, the Joint Subcommittee on Elementary and Secondary Education funding (the joint subcommittee) was created to study how to implement the recommendations from the report. The joint subcommittee met several times before taking a temporary hiatus. Both versions of the new budget’s proposals include funding for this subcommittee to return.
Although originally only included in the Senate version earlier this year, both the House and Senate’s new budget amendments include identical funding and language. Additionally, language mandating the Superintendent of Public Instruction to issue a Request for Proposals (RFP) for a contractor to support the development of a new K-12 funding formula has been included.
Salary Increases
Finally, both budgets as originally introduced included salary increases for teachers and positions included within the Standards of Quality (SOQ). The House and Senate versions include this increase once again with the House proposing a 3% salary increase and the Senate including a 4% salary increase.
VML Contact: Josette Bulova, jbulova@vml.org
Stormwater Funding
The budget proposals released by the Senate include different approaches to funding local Stormwater needs, the Water Quality Improvement Fund and WMATA. VML’s legislative positions are as follows.
Water Quality Improvement Fund (WQIF)
VML Supports continued fully funding the state’s obligations for the Water Quality Improvement Fund. The House budget includes $329.5 million for wastewater improvement projects as well as a $249.5 million deposit for the Water Quality Improvement fund; this appropriation also fully funds agricultural best management practices. The Senate budget proposes a $188.9 million appropriation for the Water Quality Improvement Fund.
Stormwater Local Assistance Fund (SLAF)
VML supports $50 million for SLAF which provides matching grants for localities to plan, design, and implement stormwater best management practices. This funding helps localities mitigate impacts from stormwater, run off and flooding due to heavy rainfall events and runoff from development. The House budget appropriates $43.5 million for SLAF while the Senate budget appropriates no funds to SLAF, a change from previous Senate budget proposals.
VML Contact: Mitchell Smiley, msmiley@vml.org
Cannabis
Based on press reports and public statements, legislation authorizing a recreational cannabis market will be included in the budget. As of the time of this publication, full details have not yet been released.
VML supports local taxation authority and land use/zoning authority which are expected to be included in the budget. Recreational sales are expected to begin July 1, 2027, with regulations developed during 2026 and the licensing process happening in the winter or spring of 2027. Based on legislative proposals from earlier this year it is unlikely that local referendum authority will be included in this proposal.
VML Contact: Mitchell Smiley, msmiley@vml.org
Transportation
Washington Metropolitan Area Transit Authority (WMATA) Funding
The Senate budget appropriates $168.2 million in the first year of the biennium for WMATA operating costs and the House budget appropriates $153 million for WMATA in the first year of the biennium.
The House budget also includes new local option authority for localities in planning district 8 (Northern Virginia) to levy a 1% retail sales and use tax to be used for public transportation and WMATA. This new language in the House budget also creates a new funding obligation for cities and counties in planning district 8 for WMATA operations by 2029.
VML Supports the financially sound operation of WMATA which includes adequate funding for the safe and continued operation of the WMATA transit system.
VML Contact: Mitchell Smiley, msmiley@vml.org
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