Republican Gov. Glenn Youngkin painted a rosy picture of the state’s financial status during his annual address to the General Assembly’s joint money committee on Thursday, but factors regarding Virginia’s fiscal health remain unknown as federal reductions continue.
“Virginia is as financially strong as she has ever been,” Youngkin told the House and Senate Appropriations committees Thursday morning.
He added that the state “overperformed” financially in fiscal year 2025 and in the first month of fiscal year 2026, leading to a $1.7 billion “cushion.” That cushion, he said, gives him confidence that the state is on track to meet the appropriations it set out in the biennial budget.
He attributed that financial strength to business investments and job growth and that the concerns related to federal funding and workforce cuts have “receded.” He acquiesced that some of those concerns remain, however.
Recent federal changes to Medicaid and the Supplemental Nutrition Assistance Program, or SNAP, will be addressed in the governor’s final biennial budget proposal, slated to be presented in December, he said.
“Governor Youngkin just delivered the kind of news every Virginian should cheer,” said House Minority Leader Terry Kilgore, R-Scott County, in a statement after the address. “The economy is growing. Jobs are growing. This didn’t happen by accident. It happened because Republicans have kept a steady hand on the wheel – and if we want this prosperity to continue, we need to keep it there.”
Regardless of the state’s fiscal gains, uncertainty swirls around the reconciliation package, the so-called “One Big Beautiful Bill,” and how it will affect the state’s coffers — specifically concerning funding for Medicaid and SNAP. The reconciliation package was passed by Congress on July 3 and signed into law by President Donald Trump on July 4.
Democrats remain skeptical of the state’s gains due to that uncertainty.
“While you might think the commonwealth’s strong, there’s a whole lot of red flags on the horizon and hurricane warnings that are coming,” said Senate Majority Leader Scott Surovell, D-Fairfax.
The source of Youngkin’s rosy outlook
State revenue collections, or taxes and fees, were higher than expected in fiscal year 2025, according to a presentation from Secretary of Finance Stephen Cummings to the joint money committee following Youngkin’s speech. Economic growth also met or exceeded expectations, Cummings said.
The presentation also outlined growth in local sales taxes — though Southwest and West Central Virginia saw the least amount of growth in that category of any region. Cummings noted that the likelihood of a recession is low and stock markets have rebounded following tariff-related volatility.
Federal government job reductions have begun to appear in the data, Cummings said, driven mainly by reduced hiring. Those reductions have not yet shown a significant effect on tax collection, he said. Job growth has slowed in recent months, with the largest losses occurring in the professional and business services sector, which saw a decrease of 3,500 jobs, and the education and health services sector, which saw a decrease of 2,200 jobs, in June 2025 compared to June 2024, according to the presentation.
The number of federal employees who work in Virginia has declined by 11,200 since January. And, Cummings noted, unemployment rates are rising, but they’re rising from historic lows — and while federal employment has declined since January, other sectors have grown, year over year.
Questions remain about Medicaid
Youngkin asserted, in his address to the joint money committee, that “not a single Virginian is ‘losing access’ to Medicaid or getting kicked off the program,” as a result of the passage of the federal, so-called “One Big Beautiful Bill.”
Sen. Creigh Deeds, D-Charlottesville, pressed Cummings on that assertion and asked whether a reduction in reimbursement to health care providers as outlined in the federal bill could result in people losing Medicaid service.
“It is our position that nobody will lose access to Medicaid and that these cuts will be phased in gradually and that hospitals are in a position to be able to absorb this over time,” Cummings said.
Julian Walker, spokesperson for the Virginia Hospital and Healthcare Association, pointed out that the federal reconciliation package included changes that will alter provider tax and the state-directed payment program.
“Our projections indicate [so-called “One Big Beautiful Bill”] policy changes could cost Virginia hospitals more than $2 billion annually in essential funding that helps sustain hospital operations, support patient access to care, strengthen the state and local economy, and provide employment across Virginia,” Walker said.
The federal legislation included a $50 billion fund, known as the Rural Health Transformation Program, to mitigate the effect of Medicaid reductions in rural areas.
“While those investments are appreciated, there is also significant need – a recent KFF estimate indicates that the temporary program funding amounts to ‘a little over one third (37%) of the estimated loss of federal Medicaid funding in rural areas,’” Walker said.
Other questions remain unanswered regarding Medicaid. New requirements for program recipients may come with a price tag for the state, but that cost is still unknown, according to a presentation to the House Emergency Committee on the Impacts of Federal Workforce and Funding Reductions. The emergency committee met after the joint money committee meeting adjourned.
Eligibility redeterminations that will increase from every 12 months to every six months starting on January 1, 2027, facilitating new work requirements and copays for Medicaid expansion enrollees with incomes above 100% of the federal poverty level, could cost the state an unknown amount of money.
Changes to SNAP and health care premium credits under the reconciliation bill and what they could cost Virginia
The so-called “One Big Beautiful Bill” included a number of changes to the federal SNAP program. The cost of those changes in Virginia is still largely unknown, but the emergency committee heard some different scenarios on Thursday.
The federal bill established a new state matching requirement for the program, based on the state’s error rate. Those error rates measure the accuracy of each state’s eligibility and benefit determinations, according to the USDA Food and Nutrition Service, which manages the SNAP program. That change is slated to go into effect on October 1, 2027, and could cost the General Fund $270 million based on Virginia’s current error rate of 11.5%, according to data presented to the emergency committee by staff.
The state’s administrative cost share for the food assistance program will increase by 25% starting on October 1, 2026, which is estimated to cost Virginia’s General Fund $90 million in fiscal year 2027.
Work requirements to obtain SNAP benefits were expanded, effective immediately, though the cost to update systems to implement those changes is currently unknown.
The federal legislation also limits eligibility for refugees and people granted asylum in the U.S. and prohibits the USDA from increasing the cost of the plan used to determine SNAP benefit levels. There was no cost associated with those changes, as listed in the presentation to the committee.
The reconciliation package did not extend the enhanced premium tax credits offered to people who buy insurance from the health care Marketplace. Those tax credits are set to expire on December 31. The loss of those tax credits could lead to higher monthly premiums for participants in Virginia’s insurance marketplace, and could make coverage unaffordable for some. The cost would be $250 million for the state to provide an identical program to Virginians.
