Federal cuts could affect all of Virginia — a new committee hopes to determine how

The need to explore the effects of federal budget cuts on Virginians crystallized for House of Delegates Speaker Don Scott when a neighbor saw him outside of his house in early February, stopped him and asked, “What are you doing to protect us?”

His neighbor is an employee at the Department of Veterans Affairs. She became alarmed by new directives that had been handed down to employees since Jan. 20, when President Donald Trump took office, Scott said. 

“She said, ‘Y’all need to look into it now,’” he said during an interview Wednesday. 

Three days after the conversation with his neighbor, Scott, a Democrat from Portsmouth, called for the formation of a bipartisan emergency committee to study the potential effects of federal workforce and funding reductions on Virginia. On Thursday, the Department of Veterans Affairs announced the dismissal of more than 1,000 employees.

Trump has issued a flurry of executive orders since he was sworn in. He also formed the Department of Government Efficiency, or DOGE, which is led by Elon Musk, an unelected billionaire and advisor to the president who has not been confirmed by the U.S. Senate. 

Since its formation, DOGE has begun work to dismantle federal agencies, including USAID and the U.S. Department of Education — potentially with more in its sights. The Trump administration has also announced potential funding cuts to the National Institutes of Health and an effort to freeze all federal grants, which sent health care providers reeling. 

The possible statewide effect of federal funding cuts

“It’s fresh, to everyone, what’s happening at the federal level, and so I think it’s prudent of the speaker to look forward and prepare, but beyond that it’s kind of a guessing game right now to what’s truly going to happen,” Del. Tony Wilt, R-Rockingham County, said. Wilt was one of 12 lawmakers tapped to serve on the emergency committee. “We really don’t know what we’re going to be facing as a state.”

Virginia is home to about 144,483 federal workers, according to a December report by the Congressional Research Service, and cuts to the workforce could have a wide reach beyond the northern part of the state. 

Rural school systems get a large portion of their funding from the state, and the biggest source of state funding is the income tax. The region in Virginia that generates the most income tax is Northern Virginia, accounting for about 40% of the state’s revenue. That means state-funded projects, from schools to roads to prisons, owe a large portion of their funding to the economic health of Northern Virginia. 

The emergency committee established by Scott on Feb. 4 is tasked with assessing the potential economic and budgetary consequences of federal cutbacks and providing policy recommendations to mitigate negative effects on Virginia’s families, economy and state budget.

“Right now, they’re taking a sledgehammer to everything. They’re not coming in a precise way, in a thoughtful way,” Scott said. “This committee is set up to really take a look at the facts, the hard data, the sobering boring facts, and let’s see if what we believe our thesis is, is true.”

That thesis, currently, is that when the federal government cuts federal jobs, or funding for health care, transportation projects, public education, agriculture and conservation projects, it hurts Virginia, Scott said. 

“I don’t want to be in a position where we are panicking,” he said. 

Virginia also ranks as the top state in the nation for federal contract awards, totaling $106 billion in 2023, according to data from the U.S. Office of Personnel Management. 

The federal workforce reductions, which include a deferred resignation program aimed at cutting federal employment by up to 10%, and the mass termination of federal office leases could have significant repercussions for the state’s economy, particularly in Northern Virginia and the Hampton Roads region, Scott’s office said in a statement. 

The U.S. Office of Management and Budget also issued a recent pause on the disbursement of federal funding, which could create funding gaps for essential services. Impacts could be felt in everything from infrastructure projects to social programs, Scott’s office said. 

“When you go out to Southwest, they’re going to be the ones hurting,” Scott said. “Some of the poorest communities that rely on these services, that we all pay taxes in to make sure that we take care of our most vulnerable communities, they’re in Southwest and Southside. … They’re going to get left further behind.”

The committee’s charge

“This is about ensuring that Virginia remains prepared and resilient in the face of federal policy shifts,” Del. David Bulova, D-Fairfax County, who is slated to chair the emergency committee, said in a statement. 

“Our state budget must remain structurally sound, and we must take steps to protect our communities from sudden economic disruptions. The committee’s work will be critical in identifying ways to mitigate the effects of federal cuts while continuing to support Virginia families and businesses,” he continued. 

The 12-member committee will be tasked with:

• Collecting and analyzing data on the potential scope of workforce and funding cuts;
• Assessing the likely economic and budgetary impacts on Virginia;
• Engaging with stakeholders, including state agencies, businesses and nonprofits, to understand their concerns and gather mitigation strategies; and
• Providing policy recommendations for the 2026 General Assembly session to address the challenges posed by these federal reductions.

“We work together, we collaborate and we look at what needs to be done in the commonwealth and we try to come up with good policy ideas and decisions,” Del. Ellen Campbell, R-Rockbridge County, said regarding the bipartisan work before the committee. 

Campbell has worked on a number of bipartisan special committees, including the Rural Healthcare Committee that was established in 2024, the Behavioral Health Commission and the Early Childhood Education Commission. She noted that the charge of the emergency committee, as it stands before its first organizational meeting, which will need to take place before May 1, is pretty “broad brush.”

Members of the committee plan to travel across the commonwealth, not just to Northern Virginia and Hampton Roads but to the Southwest and Southside regions of the state. It is expected to produce a final report with findings and recommendations by Dec. 15. 

Scott noted that there could be some good to come of the federal shakeup, but he said that guardrails need to be in place. From a state budgetary standpoint, lawmakers need to be responsible and prepare for federal funding cuts, he said.

“We have to be ready because our constitution requires a balanced budget, so we have to see what the feds are going to do,” he said. “We may have to come back for a special [session] and shave a lot of stuff out of our budget.”