A bipartisan committee of Virginia’s House of Delegates met Thursday morning to release a report on impacts from federal budget cuts on Virginia. The sobering meeting included multiple warnings from officials in leadership.
“This is a serious matter, there’s a lot of serious things here that impact the commonwealth of Virginia in significant ways,” said Delegate Terry Austin, the ranking Republican in the House money committee, towards the end of Thursday’s Joint Meeting of the Emergency Committee on the Impacts of Federal Workforce and Funding Reductions meeting. He noted, despite earlier fears, Virginia continues to run surpluses and increases in its so-called rainy-day fund. But he warned it may not last.
“We are limited on what revenues we have and what revenues we can access, and I think we’ll exercise that caution at the appropriate time,” he said.
The final report included concerns about millions in lost healthcare funds, changes to SNAP and Medicaid eligibility, and impacts on state revenues as federal employees, some of the state’s highest paid, are cut by the Trump administration.
But many of those job losses haven’t yet materialized because deferred resignations kept employees paid through the end of this month. A jump in unemployment is expected in October. And larger cuts to social programs are staggered over the next few years.
Delegate Marcus Simon compared the experience to driving on a highway, currently going 70 miles an hour, but seeing an “accident ahead” sign overhead.
“Maybe we should turn on our GPS to see how bad it can get,” the Fairfax-area Democrat said of the committee’s work.
That led to specifics about Virginia’s rainy-day fund. Committee staff said there are two pots of money containing almost $3 billion, but half cannot be accessed unless the state’s financial forecasts fall below 2%. Current revenue numbers bely its use, he and others acknowledged the other pot, known as the "revenue reserve," could be tapped more easily.
The future of SNAP funding was also a larger focus as new federal guidelines require states to match funds if error rates are over a certain percentage, but that match rate drops if the state reduces their error rate.
Delegate Mark Sickles said Virginia’s SNAP system relies on 120 local offices to handle the funds. The current error rate floats somewhere between 9 and 15%, well above the 6% the feds want.
“I’m optimistic we can do this,” he said, before pointing to the challenge of wrangling so many local operations.
“Any errors are made there, it’s not a state program,” Sickles, another Fairfax Democrat, said. “But we have $270 million riding on these local agencies doing a little bit better job.”
Committee staff said existing error rates were often linked to changes in someone’s income after they had started the program; someone might qualify when applying, but if they pick up more income it gets flagged as an error. Staff said the state was currently seeking a waiver to not count those flags.
As for insurance rates, Sickles noted federal cuts to Affordable Care Act reimbursement rates were already in the pipeline, and they were leading to rate increases currently before the State Corporation Commission.
“We achieved the lowest uninsured rate in history, the question is who is going to leave when rates go up,” he lamented. “The most likely to leave are those who are healthy and think they don’t need it. But people with chronic health conditions, they’ll keep it, and their premiums will go up.”
Urbana Delegate Keith Hodges was also hesitant to buy into the gloomy report.
“How much is the sky really falling? Is this based on a worst case scenario?” the Republican asked. “Virginia’s economy has remained strong.”
Committee staff said the issue was remaining unknowns. And while recent employment data showed increases in some sectors, the termination of federal workers would show up soon.
“There’s still jobs being shed, and they’re in the professional, technical and science industries, some of the strongest and highest paid in the Commonwealth,” staff warned.
Delegate Candi Mundon King pushed back on Hodges’ doubts. The Stafford-area Democrat said she expects her district to lose $1 million in SNAP funding and another 20,000 could lose their healthcare.
“The sky is actually falling for those families who are facing these devastating cuts,” she said.
Delegate Luke Torian, Chair of the powerful House appropriations committee, minced few words for those who doubted the impact or sought to increase spending in a budget cycle that’s likely to be marred by the same uncertainty the rest of the nation is facing.
“We can tout how strong our economy is right now, and it is in a good position,” he said. “But I want to alert my colleagues that we have been forewarned this morning that there are going to be some changes.”
Torian, a Prince William County Democrat, shifted into a gravely serious tone.
“We will work hard to appropriate the resources where they are needed to meet the basic fundamental needs of the citizens of the commonwealth: healthcare, education, increasing our job workforce as much as we possibly can,” he said. “Protecting those vital interests that we share here in the Commonwealth.”
The 2026 legislative session starts in January.
This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.
