7 things that will shape the coming year in Virginia

When the indigenous peoples of North America came into contact with settlers pushing into the interior of the continent, they were baffled by many things. One of those was that when white settlers killed buffalo (more properly, bison), they just took the meat and left the rest. Native Americans were accustomed to using “the whole buffalo,” as the phrase goes, so nothing went to waste.

This column today is about using “the whole buffalo.” I was recently invited to speak to the Salem-Roanoke County Chamber of Commerce. (Need a speaker? Let us know.) For that event, I put together a talk on seven things to look for over the coming year. The talk seemed to go well — no tomatoes were hurled in my direction — so, in the spirit of using the “whole buffalo,” I’ll turn my speaking notes into a column, and expand upon them with even more statistics than I laid on the chamber audience. So here goes. You can even listen to our audio version and will likely get a smoother delivery than what I gave, so think of this as me giving you a personal talk.

One bonus for our readers here: interactive maps! I’ve occasionally offered audiences the opportunity to perform an interpretive dance to illustrate certain points, but they’ve all strangely declined. Anyway, here goes:

1. What’s the impact of the federal government’s downsizing on local economies?

Southwest and Southside don’t have a big federal presence — we’re definitely not Northern Virginia, which I’ll deal with soon enough — but we do have some federal jobs here. There’s actually some dispute about just how many federal workers are in Virginia, and where. The standard figure quoted is 144,483. However, the same Congressional Research Service that provides that figure offers a quite different number later in the same report: 341,477. The difference depends on how those jobs are counted — and, more importantly, where they’re headquartered. For instance, that lower figure would cover civilian workers at the Pentagon but not federal workers who live in Virginia but work on the other side of the Potomac.

That latter figure comes with a breakdown by congressional district (see above). As you can see, the three westernmost congressional districts — the 5^th, 6^th and 9^th — have the fewest federal workers, but those numbers are not zeroes. Some of those are also concentrated in certain places — the Salem VA Medical Center has about 2,000 workers, for instance. We’ve seen a lot of protests, but we don’t really know yet what impact, if any, we’ll see from job cutbacks or any related service cuts. That’s what we should be keeping an eye on.

Jobs, though, aren’t the only thing we should be tracking. Every local government gets some money from the federal government. How much of that will go away and how do those local governments respond? Do they make service cuts or do they seek additional revenues — i.e., local tax increases?

The local dependence on federal funding varies greatly from place to place. However, the localities most dependent on Washington tend to be in Southwest Virginia — and rural Virginia, more generally.

Here’s an interactive map where you can check the figures for your locality.

I spoke in Salem, where the dependence is relatively low — before the pandemic, just 4.32% of Salem's funding came from Washington. (I say “before the pandemic” because federal funding during and after the pandemic spiked with one-time appropriations. To get a truer picture, we've looked back to more “normal” times, if there still are such things.) Roanoke next door got 9.69% of its funding from the feds. Lynchburg wasn't much different, at 8.88%. Lee County, though, got 19.65% of its funding from D.C. Depending on what funding might get reduced, Lee County is likely to feel the pain before, say, Lynchburg.

2. What does the dismantling of the U.S. Department of Education mean?

Canada is almost always ranked as more educated than the United States, yet Canada has no Cabinet-level education department, so maybe having a federal education bureaucracy isn't as related to educational outcomes as some think. President Donald Trump's drive to abolish the department is symbolically important, but the more important thing here may be to “follow the money.” Does federal education spending get reduced and, if so, by how much? Local school boards may not care what agency the check comes from as long as the checks keep coming.

While the federal government is by no means the main source of school funding, it is a significant source for some localities. Generally speaking, the poorer the community, the more reliant it is on federal dollars. There's a wide variance in dependence on federal education dollars. In Loudoun County, just 3% of the county's school budget comes from Washington. In Petersburg, more than 30% does. In all, 24 localities in Virginia get more than 20% of their school funding from the feds, including Bristol at 27.6%, Danville at 25.3%, Martinsville at 22.6%, Roanoke at 22.4% and Lynchburg at 21.1% — plus many smaller, rural localities.

What happens if some or all of that money goes away? For some localities, this is a big chunk of change.

3. What impact do tariffs have?

We are now in the midst of a trade war, brought on by President Trump's desire to remake the international trading system. We don't know how this will play out, but here are the important things to know. First, tariffs are simply a fancy word (of Arabic origin) for taxes, so what we're witnessing is Trump imposing taxes on imports and other countries imposing taxes on what they buy from us. Second, some parts of Virginia are more tied to international trade than others, which makes them more vulnerable to retaliatory tariffs. Those communities tend to be rural localities, partly because that's where manufacturing, agriculture and mining are based. Of course, Trump might say that these are the communities that would benefit most if his tariffs succeed in boosting American manufacturing.

The New York Times recently crunched federal data to come up with a more refined map to show where the industries then targeted by retaliatory tariffs are concentrated. Once again, they are mostly in rural areas. We can't reprint their map for copyright reasons, but you can find it here, and my column on those numbers here. The main takeaway: Buena Vista was found to have the most exposure in Virginia, with 28% of its jobs in targeted industries. Covington and Newport News (a Democratic-voting city) tied for second at 23%. Keep in mind this was before the latest round of tariffs and the international response.

Finally, Virginia companies sell goods to Canada than to any other country, so Canada's retaliatory tariffs are of more consequence to us than the retaliatory tariffs of many other countries. More analysis of federal statistics shows that the parts of Virginia that are most vulnerable to Canadian tariffs are west of the Blue Ridge, with the 6th Congressional District (the Roanoke Valley and Shenandoah Valley) having the most jobs connected to Canadian exports, with the 9th (Southwest Virginia) second. The reason: Both districts have a lot of jobs in the automative sectors and many of those products are sold north of the border. Plus, the 6th has a lot of poultry and forestry jobs whose industries export to Canada. I explore this more in depth in a column last week, but here's the data. You can scroll through this slideshow by congressional district:

Sources: Trade Partnership: Goods exports (2024 data, 2/2025 release), services exports (2023 data, 12/2024 release) and jobs, calculated figures, based on U.S. Census Bureau and U.S. Bureau of Economic Analysis data at state and national levels. Dun & Bradstreet:
Canadian-owned businesses (2/2025 release). Figures may not add up due to rounding.

4. What happens to the Northern Virginia economy?

The late Canadian Prime Minister Pierre Trudeau (father of the more recent Prime Minister Justin Trudeau) once said of the United States: “Living next to you is in some ways like sleeping with an elephant. No matter how friendly and even-tempered is the beast, if I can call it that, one is affected by every twitch and grunt.” The same applies to the rest of Virginia and its relationship to Northern Virginia. Conservative voters downstate may not like Northern Virginia's liberal politics, but they do like its money: 42% of the state's general fund revenues come from Northern Virginia. In effect, Northern Virginia subsidizes the rest of the state.

Nowhere is that clearer than with school funding. For many localities, particularly rural ones, the single biggest source of funding is the state — and roughly 42% of that comes from Northern Virginia. (The key word there is “roughly” because school funding is a little more complicated than just a straight appropriation. Lottery revenues go into school funding, and that might have a different geographic distribution. Still, the general point is that Northern Virginia accounts for a lot of state funding, and state funding is important downstate.) In a few places, it appears that Northern Virginia taxpayers might be paying more for the local schools than the local residents themselves. In Scott County, 69.7% of the funding comes from the state. If 42% of that comes from Northern Virginia, that's about 29.2% of the funding in Scott County. By contrast, Scott County's local share of school funding is 16.7%.

This interactive map shows the share of state funding per locality. The key point is we all have a stake in Northern Virginia staying healthy. About 1 in 8 workers in Northern Virginia work for the federal government. If enough of them lose their jobs that the region falls into a recession, that has implications statewide that could either lead to school funding cuts or calls to raise local taxes to make up the difference. What happens in Northern Virginia doesn't stay in Northern Virginia.

5. How will domestic migration trends play out?

Since the pandemic, most localities in Virginia are seeing more people move in than move out. Many of those are still losing population overall, but only because they're older communities and the number of deaths outnumbers both births and that net in-migration. Here's an interesting wrinkle to that: Over the past dozen years, the Roanoke Valley and Lynchburg have been rising as destinations of choice for people moving out of the Washington metro. (See the column I did on that.) The Roanoke Valley has moved up from 17^th to 11^th place; Lynchburg has moved into the top 25 and now ranks 18^th. If economic turmoil in Northern Virginia accelerates the net out-migration that was already happening there, it would seem that the Roanoke Valley and Lynchburg would be in a better position than in the past to attract some of those Northern Virginia expatriates. If so, that would help both those localities but also help the state by mitigating some of that Northern Virginia out-migration.

6. What happens to energy prices?

Energy has become politicized but often our political desires are out of line with market realities. West Virginia legislators recently asked Appalachian Power executives if they'd burn more coal if the state attracted some energy-sucking data centers. Appalachian said no, that natural gas is cheaper, so if the utility had to produce more power, it would simply use more natural gas. West Virginia legislators didn't like that answer and have now introduced legislation to require Appalachian to burn more coal — even though it's more expensive.

That matters to us because Virginia imports power, and some of that power comes from West Virginia. Appalachian says any price increases in West Virginia won’t be passed on to its Virginia customers, but it’s unclear what happens with power that goes into the grid and is purchased by non-Appalachian customers in Virginia. Put another way, to prop up the coal industry, West Virginia legislators may make Virginia customers pay higher costs even though cheaper fuels are available. Virginia already imports more power than any other state — and that out-of-state power is more expensive. Furthermore, we're looking at the prospect of importing even more power. A recent state report warned that if data centers continue to grow without restraint, the demand for power in Virginia will triple. Unless Virginia utilities build more energy generation sites — and they're always controversial, be they solar farms across Southside or natural gas plants and pipelines — then the state will have to import even more expensive out-of-state power.

7. Who wins this fall's elections?

In November, we elect a new governor and House of Delegates. Right now we have a Republican chief executive and a Democratic legislature. We could see that split continue. Or we could see both in Democratic hands or both in Republican hands. I told the Salem-Roanoke County Chamber of Commerce that there's an easy way to decide who to vote for: Look at Gov. Glenn Youngkin's recent vetoes. If you like those, then you should probably vote for the Republican nominee, likely Lt. Gov. Winsome Earle-Sears. If you don't like those, then you should probably vote for the Democratic candidate, Abigail Spanberger. If you like some but don't like others, then you're one of those undecided voters that both candidates will spend the next seven months fighting over.