Virginia's Fiscal Outlook
This past Thursday, Virginia’s legislative “Money Committees” (the Senate Finance & Appropriations, House Appropriations, and House Finance Committees) met in Richmond to assess the state’s current economic performance and fiscal forecast. According to the Governor’s administration, the Commonwealth posted a $572 million surplus, positioning Virginia’s rainy-day reserve at $4.7 billion.
From a pure numbers standpoint, it is hard to argue against the headline that Virginia is in sound fiscal health. Finance Secretary Stephen Cummings laid out a vision of a state positioned for long-term growth, underscored by rising revenues, high employment, and a well-cushioned budget stabilization fund.
But deeper questions linger: who exactly is benefiting from this surplus and at what cost?
The Governor’s optimism is undercut by the grim news coming every day from the Congressional Republicans’ childishly-named “Big Beautiful Bill,” as well as by the ongoing and unpredictable threats of federal funds being held hostage for political reasons, tariffs that impact businesses and individual consumers, and the lack of a clear policy agenda from either Youngkin or Trump. While Youngkin argued that Medicaid coverage will remain unaffected, I and others raised concerns about looming federal work requirements attached to the Medicaid program that will likely, according to the Congressional Budget Office, disqualify thousands of low-income Virginians from healthcare access.
So, while a healthy surplus can be seen as a government operating efficiently, it is (for us in Virginia) a symptom of our under-investment in critical services such as health care, education, and key social safety nets.
Additionally, the Governor downplayed the effects of recent federal workforce changes, asserting that job losses had been minimal. As some of my colleagues pointed out, the pending federal buyouts and early retirements are not yet reflected in Virginia’s workforce data. The claim that Virginia is outperforming expectations is premature, especially if key sectors such as defense contracting or federal employment face steep declines.
This joint meeting was not just a budgetary check-in; it was a barometer for Virginia’s legislative agenda as we head into the 2026 General Assembly. The surplus and reserve levels will shape debates over education funding, infrastructure investments, healthcare coverage gaps, housing, and more. We must remind ourselves that one-time surpluses may mask long-term weaknesses, most especially in infrastructure, housing affordability, and health care.
Given the chaos, disruptions, and dysfunctionality of the Republican-led Congress and the Trump administration, we will need to craft our next two-year budget with caution and with an eye to addressing the gaps that will likely continue to widen as the “beautiful bill” begins to show its true colors: a coarse and harsh agenda based on the politics of causing harm rather than promoting the public good.
