As the 2025 legislative session comes to a close, questions remain regarding federal cuts

A special bipartisan committee met for the first time Saturday morning, on the last day of the 2025 legislative session, to gain an understanding of the current landscape shaped by the first few weeks of the second Trump Administration, which has already announced a number of federal cuts. 

“As we prepare to adopt our budget today, I think each of us is very keenly aware that Virginia relies on its partnership with the federal government to provide critical services that Virginians rely on,” said Del. David Bulova, D-Fairfax, who chairs the special committee. 

He noted that those services include education, housing, health care services and transportation, to name a few. He said workforce spending cuts could affect individual families as well as the Virginia economy and state budget. The Virginia constitution requires the legislative body to balance the commonwealth’s budget each year, and as such, Bulova said, it’s “prudent” for the General Assembly to work to understand how federal cuts could affect the state’s economy. He also noted that the legislative body has a responsibility to help Virginians navigate challenges posed by federal cuts. 

“They will be turning to us as their elected leaders to do what we can to help them,” he said. 

The committee’s charge will be to:

• Collect and analyze data on the potential scope of workforce and funding cuts; 
• Assess the likely economic and budgetary impacts on Virginia;
• Meet with stakeholders, including state agencies, businesses, and nonprofits to understand their concerns and gather mitigation strategies; and
• To provide policy recommendations to the General Assembly to address the challenges posed by federal reductions. 

The committee plans to meet about four times in different parts of the state: First in Northern Virginia, then in Hampton Roads, followed by a meeting to take place in Western Virginia and finally in Richmond. 

“If the federal government changes the rules, then we will have to adjust,” said Del. Robert Bloxom, R-Accomack County, who sits on the special committee as ranking member. “All of this is in flux — we don’t know if they’ll just cut funding across the board or if they’re going to change the rules or if they’ll change the applications, we really just don’t know yet.”

How workforce cuts could affect Virginia remains unknown, for now

There are about 145,000 federal jobs in Virginia, according to the Office of Personnel Management. About 315,000 federal workers reside in Virginia, according to the Census Bureau — that includes federal employees who live in Virginia and commute into Washington, D.C., or Maryland — and there are about 400,000 contracted employees in the commonwealth, according to data presented to the committee by Clark Mercer, executive director of the Metropolitan Washington Council of Governments and once chief to staff to then-Gov. Ralph Northam.

About 28,628 federal jobs are located in Virginia’s 5th, 6th and 9th Congressional districts combined, according to a 2024 report by the Congressional Research Service. About 10% of the workforce in Virginia are federal employees. 

“There’s a lot of unknowns; anyone who tells you they know exactly what’s going on in D.C. and how that’s going to affect Virginia isn’t being truthful,” Mercer said. 

He noted that the level of federal workers in Virginia has been relatively stable going back several presidential administrations. 

Three scenarios of reduction are playing out, Mercer said. Those being cut include probationary employees, those who took buyouts and formal reductions in force. Employees under the “probationary” category includes workers who recently received a raise or promotion, not just new hires or employees who are under review due to performance issues. 

Mercer said that, as of Saturday, 295,000 federal employees had been cut. Of those, 220,000 were probationary; 75,000 had accepted buyouts. 

“This is very fluid and kind of changes by day,” Mercer said. “So much of our state workforce is funded with and relies on federal dollars.”

How federal funding cuts could affect state and locality budgets also remains unknown, for now

“Additional analysis is needed over the next several months to truly understand the challenges reductions in federal spending can cause for the state government, state government services, as well as our workforce,” said Kim McKay, a legislative fiscal analyst for the House Appropriations Committee, during a presentation to the special committee on Saturday. 

McKay noted that early analysis of spending during fiscal year 2024 showed that about one-third of state spending is supported by federal funding. About 95% of that spending is through Virginia’s Secretariat of Education and the Secretariat of Health and Human Resources. 

The top five programs supported by federal funds in Virginia are Medicaid, which received about $14.6 billion from the federal government in fiscal year 2024; aid to public education, which received $2.5 billion; higher education, which received $1.4 billion; social services, which received $1.4 billion; and transportation, which received $1.4 billion. 

Federal spending supports not only the state budget but Virginia’s businesses, individuals and local governments, McKay said, and any contraction of that spending will likely affect the state’s general fund revenue due to Virginia’s reliance on personal income and sales tax. 

“There is a palpable sense of anxiety amongst local government officials about what the impacts are, part of it is just the unknown, the uncertainty,” Joe Flores, director of fiscal policy for the Virginia Municipal League, told the committee. 

Federal funding accounts for, on average, about 10% of local revenue, he said. Flores noted that questions about federal grant funding and workforce cuts are making it difficult for some localities as they try to pull together their budget for fiscal year 2026. 

The General Assembly took steps to ensure it can enter into a special session to address any impacts due to federal cuts. Usually only the governor can call for a special session, but the body moved to circumvent the executive branch by filing a resolution late Friday that would expand the scope of an ongoing special session that was never adjourned in 2024. That would allow for the General Assembly to gavel into a special session to tackle federal cuts should the need arise. 

“We’re going to make sure that we continue to do the work necessary to protect the commonwealth of Virginia,” Speaker Don Scott, D-Portsmouth, said during a press gaggle after the House gaveled out.