With job growth stalling, Virginia Republicans debate tax cuts vs. rainy day fund

The office of Gov. Glenn Youngkin tried to put a positive spin on jobs numbers this week, touting a 100,000 more people working since January milestone, but inside the numbers, job growth appears to have stalled.

Bureau of Labor Statistics household survey data released Friday by the Virginia Employment Commission showed that Virginia added nearly 6,000 jobs in July, which is still a net positive, obviously, but the Virginia Employment Commission has been reporting a sharp uptick in new initial unemployment claims in recent weeks, and the labor force participation rate, the measure of the proportion of the civilian population age 16 and older that is employed or actively looking for work, was down a tenth of a point last month, to 63.8 percent.

Also troubling: the labor force in Virginia is still roughly 120,000 less than what it was before the start of the COVID-19 pandemic in March 2020.

“The slowdown in monthly job creation and the lower level of job participation have my full attention,” Youngkin said. “We will continue the critical work to return more Virginians to the workforce and will double-down on policies that make Virginia attractive for job growth and business investment. We remain laser-focused on our mission to make Virginia the best place to live, work and raise a family.”

To Youngkin, that means tax cuts – he said on Friday that he will push in 2023 for $400 million in tax cuts, no doubt hoping to burnish his credentials as he further explores a bid for the 2024 Republican presidential nomination.

“It’s not our money. It belongs to the hard-working taxpayers of Virginia,” Youngkin said in a 25-minute speech to members of the money committees in the Virginia General Assembly, in which he announced that the state had wrapped the 2022 fiscal year on June 30 with a $3.2 billion cash surplus.

The soundbite is all well and good, but the thinking behind it doesn’t take into account matters like the staffing shortages being experienced by localities across the state in law enforcement and K-12 education that are a direct result of low pay.

It also doesn’t take into account that while things are looking good budget-wise in the here and now, we literally just went through a two-year downturn that should inform decisions about how to put some money aside for the future.

“I’ve just been here long enough where I have been through this cycle where we think things are running robust and then we hit 2018 or, you know, 2008 or 2009,” Senate Minority Leader Tommy Norment told the Washington Post. “When we hit that downturn, all of a sudden these revenues drop off for whatever reason, it is going to be a great comfort that we have those resources.”

Norment and Virginia Beach Del. Barry Knight, chair of the House Appropriations Committee, would prefer to see the General Assembly set aside the $400 million that Youngkin is targeting for unspecified tax cuts into the state’s rainy day fund.

“It’s a wonderful place to park $400 million,” Knight told the Post. “It kind of sets the tone for what we may be looking at going forward.”