Youngkin, who’s backed Trump’s agenda, sets aside $900 million as cushion for economic pain it could unleash

Virginia’s term-limited Republican governor remains steadfast in his support for Trump’s massive federal workforce cuts, intensive trade war, and push to slash federal spending – even as he acknowledged the “short-term risks” are real. 

Gov. Glenn Youngkin signed a budget bill last week that sets aside $900 million as a cushion against the risks to Virginia’s economy being created by the Trump administration. 

The savings mostly come from Youngkin setting aside spending on capital projects for higher education in Virginia. Youngkin backed the additional savings while remaining steadfast in his support for President Trump’s policies, despite the risks they pose to Virginia’s economy.

Virginia is home to over 300,000 federal civilian workers and Trump’s massive federal workforce cuts have hit Virginia disproportionately hard. His steep tariffs as part of his ongoing trade war are also expected to raise prices for businesses and consumers. 

The state is already starting to feel the effects of the trade war after Volvo blamed tariffs for layoffs and Dominion Energy says tariffs are raising the costs of an offshore wind project about 30 miles off of the coast of Virginia Beach. 

“We all know that as President Trump rightfully resets trade imbalances and restores fiscal responsibility in DC, there are short term disruptions,” Youngkin said at a press conference in Richmond on Friday. “However, there are real long term opportunities and yet those short term disruptions, I think, require us to be responsible.”

Analysts have projected that Virginia’s budget should end up with a $3.2 billion surplus in fiscal 2026, but Trump administration policies have created what Youngkin has framed as “short-term risks” to the state achieving that surplus. 

From the start of the Trump administration in January, Virginia Republicans like Youngkin and state Democrats have disagreed about the scope and impact of Trump’s policies on Virginia. Youngkin’s move to pull $900 million in spending from the budget bill in case of a potential financial hit was arguably his most direct acknowledgment of the costs of Trump’s policies. 

“We need to create a cushion,” Youngkin said. “We need to hope that the cushion is not used, but we should not spend 100% of our forecasted surplus before it’s in the bank.”

Virginia Senate Majority Leader Scott Surovell, a Democrat, pushed back on the idea that Virginia needed to set aside more money given the state already has about $4 billion in savings. 

“We have the largest amount of reserves we’ve had in history,” Surovell told The Dogwood on Monday. “We’re pretty well positioned to deal with an economic downturn.”

Surovell said he remains concerned about how the impacts of Trump’s federal workforce cuts, trade war, and spending cuts will play out across all of Virginia – not just Northern Virginia. Democrats are worried that if Republicans in Washington make good on the spending cuts they are pursuing, then it will set in motion Virginia’s Medicaid expansion trigger law. The law says that if federal funding for Medicaid expansion drops below 90%, then the state is required to disenroll and eliminate coverage for 630,000 people. 

Youngkin downplayed those fears last week, noting that the budget bill he signed fully funds Medicaid in Virginia.

But Surovell said legislators will likely have to meet back in Richmond at some point this year to address either the economic impacts of Trump’s agenda on Virginia or possible cuts to Medicaid. 

“The economic impacts to the state are going to be broad and deep,” Surovell said. “The governor should see a psychiatrist if he’s having difficulty understanding that as a factual reality.”