Five years after the arrival of the COVID-19 pandemic, the Virginia General Assembly adopted a revised state budget on Saturday evening in the shadow of President Donald Trump's rapid reduction of the federal government workforce and spending on which Northern Virginia and much of the state's economy depend.

The House of Delegates adjourned at 5:41 p.m. and the Senate at 6:23 p.m., closing out the 46-day legislative session after both chambers adopted proposed changes to the revised budget that Gov. Glenn Youngkin introduced in December ahead of his final legislative session. The House passed the budget on a vote of 82-18 and the Senate by 37-3.

Earlier Saturday, an emergency House subcommittee appointed by Speaker Don Scott, D-Portsmouth , held its first meeting. That was hours before the assembly convened to consider the budget and a new resolution for a special session to address the effects of federal cuts. Lawmakers did not yet specify the date of the special session. (The resolution would expand the scope of the special session Youngkin convened last year to complete work on the budget.)

Last year, the Republican governor vetoed a record 201 pieces of legislation, and he appears likely to veto some of them again in taking action on bills by March 24.

"They're sending me a lot of bills, many of them I've seen before and there are areas of common ground, as well," he said in an interview with the Richmond Times-Dispatch on Saturday morning. "And so we'll go to work here after everybody heads back to their families.”

Youngkin expressed mixed feelings over the revised budget that an assembly conference committee produced. It includes more than $1.1 billion in tax cuts, most of it in a one-time income tax rebate, due on Oct. 15, weeks before elections for the House, governor, lieutenant governor and attorney general. Individuals would receive $200; couples filing jointly would get $400.

The proposed budget would also raise the standard deduction for taxpayers by $250 for individuals and $500 for couples filing jointly, and increase the refundable portion of the earned income tax credit to 15% to 20% of the federal credit.

The governor had sought a new income tax credit over the next three years to compensate some Virginians — depending on how much they earn and where they live — who pay local personal property taxes on vehicles. It would not have eliminated or reduced the car tax, as it is known. He had also proposed a new income tax deduction of money received in tips, which he modeled on a proposal Trump made during the presidential campaign.

“I appreciate the fact that we have come together around tax relief, and that the Democrat leadership recognizes that Virginians deserve tax relief and are overtaxed,” he said, but added, "I have believed strongly that it should take a different form.”

Sen. Glen Sturtevant, R-Chesterfield, was one of three senators who voted against the budget, saying it should have reflected more of Gov. Glenn Youngkin's priorities.

Sen. Glen Sturtevant, R-Chesterfield, was one of three Republican senators to vote against the budget. He cited Youngkin's positions on taxes, private school vouchers and a cap on college tuition.

"None of that was included in the final budget," Sturtevant said.

Special session

Asked about the special session that Scott and Senate Majority Leader Scott Surovell seek to deal with the effects of federal job and spending cuts, Youngkin said "the anxiety and concerns" of federal workers "are not just understandable, but I have tremendous empathy for those concerns."

He said his message to those employees is simple: "We want you in the Virginia workforce, and therefore we will use all of the assets at our disposal to help them find a new opportunity in Virginia."

Youngkin, who has become a close ally of Trump, estimated that Virginia has 290,000 open jobs that could absorb federal employees who "may experience a disruption."

Virginia Employment Commissioner Demetrios "Mitch" Melis told the emergency committee that fewer than 300 federal employees have filed initial claims for unemployment insurance since Trump took office, including 72 confirmed by the U.S. Department of Labor through Feb. 15.

Melis said that based on a survey of the largest federal government contractors, about 120 federal contract employees have filed unemployment claims in Virginia.

He said the VEC, the governor's office and Virginia Works have posted resource pages for federal workers on their websites.

"The Virginia Employment Commission ... continues to remain in a state of preparedness," Melis said. "I think we've been in a state of preparedness the entire post-pandemic time."

Budget precautions

The revised budget, pending Youngkin's signature, includes provisions that would require the governor to submit a budget bill if the state were to experience a decrease in general fund revenues of $100 million or more, either from grants or tax law changes. It would also freeze automatic conformity of state tax code to changes in federal law for two years to allow assembly review.

In 2020, the assembly adopted a new budget and adjourned, despite warnings that it would have to return to reset all expectations because of the effects of a global pandemic that caused more than 400,000 Virginians to lose their jobs in the next few months.

This time, state and local officials are sounding the alarm over what they see as a threat to Virginia's economy, government revenues and such core public services as health care, public education, food assistance and services for military veterans.

The effects are just beginning to be felt in Northern Virginia and other parts of the state with high concentrations of federal employees, but also could hurt small towns and cities in rural Virginia that rely on federal grants for up to 36% of their revenues.

"There is just a palpable sense of anxiety among local government officials," said Joe Flores, who was deputy secretary of finance when the pandemic hit Virginia and now serves as director of fiscal policy at the Virginia Municipal League. "We don't know what we're shooting at in terms of trying to set our budgets."

Some legislators say their constituents are already expressing their fears and anxiety as the new Trump administration, aided by billionaire Elon Musk and the new Department of Government Efficiency, attempt to freeze trillions of dollars in federal spending and force remote workers to return to their offices or lose their jobs.

The Trump administration has offered buyouts that an estimated 75,000 federal employees have accepted, and it plans to lay off nearly all of more than 220,000 workers on probationary status.

The administration has already targeted the U.S. Agency for International Development for elimination, freezing shipments of food supplied by farmers in Virginia and across the country, suspending staff and cutting off federal reimbursements to private contractors for work they had already performed before Trump took office on Jan. 20.

"They're hurting, they're scared and they've lost their jobs through no fault of their own," said Del. Michael Feggans, D-Virginia Beach.

Feggans and other legislators on the 12-member "Emergency Committee on the Impacts of Federal Workforce and Funding Reductions" struggled on Saturday to define the scope of the threat, including how many federal employees and contractors live in Virginia.

Different estimates

The Office of Personnel Management estimates the number of federal jobs in Virginia at around 145,000. That does not count all of the employees who live in the state but work in Washington, D.C., or Maryland, said Clark Mercer, executive director of the Metropolitan Washington Council of Governments, who was chief of staff to then-Gov. Ralph Northam during the COVID-19 pandemic.

Mercer cited U.S. census data that shows nearly 400,000 federal workers in the national capital region. More than 161,000 live in Northern Virginia, or almost 16% of all workers in the region. He estimated an additional 400,000 Virginia residents work for private firms with federal government contracts. Virginia ranks second among states for federal contracts at $110 billion.

Eric Scorsone, executive director of the Weldon Cooper Center for Public Service at the University of Virginia, estimated that more than 475,000 Virginians work for the federal government, most of them in jobs outside of the state in D.C. and Maryland. Of those, he estimated that about 180,000 work as civilian employees in national security and about 130,000 are active-duty military.

Scorsone estimated that "at least 25,000" federal employees have moved out of Northern Virginia to the Richmond area and other parts of the state since the pandemic because they have been working remotely.

"Virginia's professional services sector is one of the largest in the country," he said. "That's largely driven by federal contractors."

Some legislators expressed concern about the wide range of estimates as well as the potential jobs and residents affected.

"We don't know what we're really dealing with here, so we need better data," said Del. Anne Ferrell Tata, R-Virginia Beach.

One-third of revenues

The scope of cuts in federal grants to state and local governments is also unclear because Trump and Congress are just beginning the process of proposing a budget that drastically reduces discretionary spending as they look for savings to pay for tax cuts.

But Virginia already knows where the greatest concerns lie in state government. Federal spending accounted for about one-third of all state spending last year, or $23.7 billion.

The biggest share of that is the $14.6 billion for Medicaid, which pays for health care for low-income Virginians, most of them children, elderly residents and people with disabilities. The state has more than $4 billion set aside in its rainy day and reserve funds, but House Appropriations staff analyst Kimberly McKay said, "It's just very difficult to backfill $14 billion of federal support with our state general fund dollars."

The state also received $2.5 billion to fund public schools, $1.4 billion for colleges and universities, $1.4 billion for a range of social services from food stamps to foster care programs, and $1.4 billion for transportation projects, McKay said.

A 'scary problem'

But the money the state gets is dwarfed by direct payments from Washington to individuals, including $38.1 billion from Social Security, $7.7 billion for veterans services, $2.2 billion for health care and $1.6 billion from the U.S. Department of Agriculture.

Local governments also depend on federal dollars for about 10% of their revenues, Flores said, but small cities, counties and towns rely on them most. For example, Marion and Bluefield, towns in Southwest Virginia, rely on federal spending for more than 30% of their revenues. Federal spending accounts for more than 20% of revenues in Wise County; the cities of Bristol, Martinsville and Galax; and the towns of Bedford, Wise, Tazewell, Culpeper, Pulaski and Bridgewater.

Del. David Bulova, D-Fairfax, chairman of the emergency committee, called those percentages "a real wakeup call."

Del. Marcus Simon, D-Fairfax, says deep cuts in federal spending are "a big scary problem."

Del. Marcus Simon, D-Fairfax, said the legislature will need to think about how to keep providing key public services if federal support payments for them are cut, while Flores made the same point about what’s preoccupying local governments.