Youngkin: Virginia In “An Extraordinary Position of Financial Strength”
By Steve Haner
The Commonwealth of Virginia ended its last full fiscal year under Governor Glenn Youngkin with a large stash of ready cash, $1.7 billion, despite more than $7 billion in tax cuts and tax rebates over the past three years. That includes the $200 rebate income taxpayers will get before the November election.
Another $4.7 billion was resting in the largest two reserve funds as of June 30. Four years earlier, before Youngkin took over, that balance was $1.5 billion. He has tripled it.
The state is in “an extraordinary position of financial strength” Youngkin told a meeting of the General Assembly’s financial committees on Thursday. Yes, the future is marked by some uncertainty and reasons for caution, thanks to action at the federal level, but unencumbered cash is there to deal with what comes.
Because the fiscal year just ended saw revenues $2.7 billion ahead of initial estimates, and even $572 million ahead of the revised estimate adopted later, revenue really doesn’t have to grow to cover the new budget. The required growth for fiscal year 2026, already underway, is just 4 tenths of one percent more money than was collected this year.
And that is after accounting for the fourth year of tax relief under Governor Youngkin, another $1.6 billion in taxes which otherwise would have been collected in FY 26. They include the lower taxes resulting from the higher standard deduction, elimination of state sales taxes on groceries, two increases in the Earned Income Tax Credit and the elimination of income taxes on the first $40,000 of military retiree pay.
Youngkin, a Republican generally supportive of the policies of President Donald Trump, also used his speech to push back on many of the favorite doom narratives of Virginia Democrats in this campaign season. His Secretary of Finance, Stephen Cummings, did the same with his longer and more detailed slide presentation.
“Changes to Medicaid are not taking coverage away from anyone,” Youngkin said. “I want to say that again: not a single Virginian is “losing access” to Medicaid or getting kicked off the program. Not 40,000 Virginians. Not whatever number some are saying on a given day. No Virginians are losing their Medicaid coverage.
“Medicaid was designed for persons with disabilities, the elderly who need long- term care support, and families with children in poverty. It was never designed to be permanent health care for able bodied people who are capable of working, going to school or volunteering in their communities.”
Cummings made the same point in his presentation, that the work requirement doesn’t begin until 2027 and only those who choose to ignore it put their enrollment in jeopardy. When a Democratic delegate complained about the impact on somebody dealing with cancer treatment, Cummings pointed out the change had no impact on somebody who is not able to work due to illness or disability, or the elderly or those with children at home. For the able bodied and childless of working age, actively engaging in education or community service can substitute for work.
Moving to the dire predictions Virginia state taxpayers might have to pick up part of the tab for the SNAP program, commonly known as food stamps, Youngkin said that need not apply to Virginia at all. What the federal government is doing is creating consequences for administrative errors that allow people to collect who are not eligible, and Virginia can reduce its error rate to avoid that penalty.
“These (SNAP) programs are administered by the localities, not the state,” Youngkin said, “and many localities have significant issues that drive-up the state’s average error rate. We are going to work. We are going to go to work together. We are with the localities to get our error rate down and drive Virginia’s state share which could be reduced to zero. To the lowest place we can get it.”
Headlines have focused on various federal funding programs paused by the Trump Administration, cutting off money earmarked for Virginia. Youngkin pointed out the rest of the story, which has gotten less attention.
“We’ve had approximately $2.5 billion of federal programs and grants that were paused at some point over the course of this year. We’ve been able to constructively work to get $2.1 of the $2.5 billion flowing again. And of the remaining $420 million, roughly $300 million was COVID funding that was set to expire anyway,” Youngkin said.
Cummings went into detail on the impact of the reduction in force in the federal workforce, with some historical data to provide context. There is always some churn from federal retirements and voluntary separations, averaging about 37,000 a month nationally. There was a spike of departures early in the Trump administration, but that has abated, and the number is back at or below the running average.
What has happened is that federal hiring has dropped off dramatically. Those leaving, whether voluntary or not, are not being replaced in full. The average monthly number hired was 41,000 (note that is higher than the separations) and is now well below 25,000. The net job loss nationally has been about 80,000, with 11,200 of those in Virginia, Cummings reported.
Can they find work elsewhere? Here is what Governor Youngkin said:
“Today, we have over 265,000 more people working in Virginia than when we all started together three and a half years ago. Over 265,000 more people who have heard those powerful three words: “You Are Hired.”
“Virginia has roughly 250,000 open jobs today. Jobs driven in part by the over 15,000 high-growth startups that have opened in Virginia in the last three years. And on top of that the $125 billion in business commitments underpins an additional 80,000 jobs that will provide future opportunity for Virginians across the great Commonwealth.”
In December, just before leaving office, Youngkin will introduce one more two-year budget. Then the next governor, whoever she is, gets to offer changes to that document. That budget, which will go into effect July 2026, will have to address some of the challenges posed by the Trump Administration’s policy changes. The June 30, 2025 cash balances and reserve accounts Youngkin is leaving behind will make that next governor’s job far easier.
Well done, sir. You leave the place better than you found it.
Republished with permission from Bacon’s Rebellion.
