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Virginia lawmakers are preparing for economic fallout as the federal government cuts jobs, terminates office leases and attempts to freeze billions of dollars in funding.
House Speaker Don Scott, a Portsmouth Democrat, announced Tuesday evening that a bipartisan emergency committee will examine the effects of federal workforce and funding reductions and recommend ways to protect Virginia’s economy, workers and essential services.
“This is not about politics — it’s about protecting Virginia’s workforce, economy, and essential services,” Scott said.
Nearly 145,000 federal civilian employees live in Virginia, alongside an even larger population of federal contractors. The commonwealth also led the nation in federal contract awards in 2023, receiving $106 billion.
President Donald Trump’s administration has accelerated efforts to shrink the federal workforce during his second term. Thousands of positions have been targeted through a deferred resignation program, while major federal office leases have been terminated.
The U.S. Office of Management and Budget also paused the distribution of federal funds, potentially leaving states to cover budget shortfalls. A federal judge temporarily blocked enforcement of that policy last week, adding uncertainty about whether and when funding will flow.
Northern Virginia Faces Heavy Exposure
Northern Virginia and Hampton Roads could be among the regions most affected because federal employment and defense contracts play major roles in their economies.
Defense contractors, technology companies and research institutions with close federal ties are expected to face particularly acute pressure. Local governments are also concerned because they depend on federal grants for infrastructure, education and public-safety programs.
State officials warn that the effects could extend well beyond federal agencies and large contractors. Small businesses and service industries supported by federal employees and government spending could lose customers if layoffs accelerate.
A steep drop in federal spending could result in job losses, weaker consumer spending and declining state revenue.
Del. David Bulova, a Fairfax Democrat who will chair the new committee, said Virginia must remain financially prepared for sudden federal policy changes.
“Our state budget must remain structurally sound, and we must take steps to protect our communities from sudden economic disruptions,” Bulova said.
The committee will collect data, consult affected groups and propose policies addressing displaced workers, budget gaps and funding for essential services.
“We cannot afford to be caught off guard,” Bulova said. “This committee will ensure that we develop thoughtful strategies to safeguard our economy, help displaced workers, and maintain funding for essential services.”
Bipartisan Panel Sets December Deadline
Del. Robert Bloxom, an Accomack Republican, will serve as vice chair. The committee also includes Dels. Bonita Anthony of Norfolk, Ellen Campbell of Rockbridge, Joshua Cole of Fredericksburg, Michael Feggans of Virginia Beach, Hillary Pugh Kent of Warsaw, Marcus Simon of Fairfax, Anne Ferrell Tata of Virginia Beach, Josh Thomas of Prince William, Tony Wilt of Winchester and Vivian Watts of Fairfax.
Scott said state leaders have a responsibility to act before federal decisions cause potentially devastating consequences for Virginia families and businesses.
The committee is expected to meet for the first time by May 1 and deliver its final report by Dec. 15. Lawmakers intend to use its findings to help shape preparations during the 2026 General Assembly session.