The Emergency Committee on the Impacts of Federal Workforce and Funding Reductions held its initial meeting on Saturday, February 22, prior to the General Assembly concluding its 2025 regular session work. House Speaker Don Scott appointed the bipartisan committee earlier in February, charging committee members with collecting data on the potential scope of reductions to the federal workforce or other federal funding cuts and the effects of these actions on Virginia’s economy and budget, and seeking stakeholder perspectives on ways to mitigate these impacts on Virginia and make the state’s economy more resilient.
The Committee received briefings from Clark Mercer, Executive Director of the Metropolitan Washington Council of Governments, and Eric Scorsone, Executive Director of the Weldon Cooper Center for Public Service, who shared estimates of the numbers of federal jobs based in Virginia and federal workers who reside in Virginia, as well as estimated economic effects on Virginia of varying scenarios of reductions in federal civilian employment.
House Appropriations Committee staff also provided an overview of the importance of federal spending to Virginia’s budget; staff’s preliminary estimates indicate that approximately one-third of the state’s total spending in FY 2024 was supported by federal funding, with Medicaid receiving the lion’s share of federal dollars ($14.6 billion), followed by K-12 ($2.5 billion), higher education ($1.4 billion), social services ($1.4 billion), and transportation ($1.4 billion). In addition, Virginia benefits from direct federal payments to residents, as well as federal contracts. As reported in VACo’s summary of the state budget amendments recently passed by the General Assembly, legislators embedded several provisions intended to allow the state to respond to significant changes in federal spending, including reporting requirements on any federal changes that would affect state general fund revenues or federal grant funding; a requirement for the Governor to consult with legislative leadership about a special session if federal grant reductions reach a certain threshold; and a pause on the state’s automatic conformity with the federal tax code.
Joe Flores, Director of Fiscal Policy for the Virginia Municipal League, shared an overview of the importance of federal funding to localities, particularly in certain regions with large concentrations of federal workers. He pointed out that local governments are in the process of adopting FY 2026 budgets, and explained the critical importance of clarity on which federal grants may be subject to funding freezes. He suggested that timely access to unemployment data from the state would be helpful in allowing localities to understand the scope of job losses and respond accordingly.
Virginia Employment Commissioner Mitch Melis shared information with the Committee on how unemployment insurance benefits are provided to federal workers who lose their jobs, and discussed improvements to the state’s system that were made in response to the influx of unemployment claims during the COVID-19 pandemic, assuring Committee members that the Virginia Employment Commission is prepared to handle large numbers of claims from federal workers if needed.
Committee members concluded the meeting with a roundtable discussion of additional data points and items to consider in the Committee’s next meetings, which are planned to be held in different regions of the state. Items discussed included the importance of obtaining clear data on the federal workforce’s presence in Virginia; an interest in modeling the effects of several different job loss scenarios on the Virginia economy; the need to invite participation by private sector businesses that may have job openings; potential effects on the housing market; impacts to higher education as well as K-12; and opportunities to re-examine the respective responsibilities of the state and federal governments.
Presentations from the February 22 meeting are available at this link.
VACo Contact: Katie Boyle