Virginia

Virginia

Budget Links

FY2027-2028 (proposed)
FY2025-2026 - budget adjustments (enacted)
FY2025-2026 (enacted)
FY2023-2024 - budget adjustments (enacted)
FY2023-2024 (enacted)

Proposed Budget - Fiscal Years 2027-2028

On December 17, Outgoing Virginia Governor Glenn Youngkin released a biennial budget that proposes all funds operating spending of $99.96 billion in fiscal 2027 and $99.85 billion in fiscal 2028. General fund operating spending would total $34.8 billion in fiscal 2027, an increase of 6.2 percent over the fiscal 2026 base budget, and $35.3 billion in fiscal 2028, an increase of 1.7 percent over fiscal 2027. After accounting for proposed tax policy changes, the general fund revenue forecast estimates revenues of $33.2 billion in fiscal 2027, an increase of 3.0 percent over the fiscal 2026 forecast, and $34.2 billion in fiscal 2028, an increase of 3.2 percent compared to fiscal 2027. When transfers and balances are added in, total general fund resources are forecast at $36.2 billion in fiscal 2027 and $35.8 billion in fiscal 2028. The budget assumes an unexpended general fund balance of $305.4 million at the close of the biennium. The combined reserve fund balances meet the 15 percent statutory cap, totaling $4.3 billion in fiscal 2027 and $4.4 billion in fiscal 2028.

Proposed Budget Highlights 

Tax Policy Changes

• The introduced budget will substantially conform to federal tax changes enacted in the One Big Beautiful Bill Act (OBBBA).
  
  • Combined, the provisions will decrease revenues for fiscal years 2027 and 2028 and ease the administrative and compliance burden on the state and taxpayers.
    
• Recommends market-based sourcing (beginning in tax year 2027) and making permanent the elective pass-through entity tax.
  
• Includes a Virginia deduction for no tax on car loan interest, no tax on tips, and no tax on overtime.
  
• Makes the increased standard deduction amount and refundable Earned Income Tax Credit amount, both currently scheduled to expire on January 1, 2027, permanent.
  

Health and Human Resources

• Increases general fund and nongeneral fund spending in each year of the biennium to fund the forecasted costs of utilization and inflation in the Medicaid program.
  
• Proposes nongeneral fund spending in each year, with associated positions, to implement the Medicaid work requirement and more frequent eligibility redetermination provisions of OBBBA.
  
• Proposes nongeneral fund spending in each year, with associated positions, to support the anticipated receipt of the federal Rural Health Transformation grant.
  
• Recommends cost containment measures, including eliminating the biennial inflation for Medicaid providers, adding limits to mobile crisis services and eliminating community stabilization services, limiting maternity services to emergency Medicaid for individuals not qualified for Medicaid based on citizenship status, capping annual spending per recipient for Medicaid adult dental services, removing duplicative individuals enrolled in Medicaid in other states, and capturing savings from a preferred rebate on GLP-1 drugs provided through Medicaid.
  
• Allocates additional general funds to fund the new state share match rate for the Supplemental Nutrition Assistance Program (SNAP).
  
• Addresses the SNAP error rate by funding a SNAP quality assurance team and funding SNAP quality control reviewer salaries. 
  
• Funds child welfare system initiatives that increase accountability, strengthen the child welfare workforce, centralize child protective services intake, and further child safety.
  

Education

• Provides additional general funds to fully fund the state share of rebenchmarking and other routine, non-policy updates for the biennium.
  
• Supports a two percent salary increase in fiscal 2027 (and an additional two percent salary increase in fiscal 2028) for instructional and support positions.
  
• Allocates general funds to support additional Child Care Subsidy Program slots for children ages birth to five, redirected from Virginia Preschool Initiative nonparticipation savings.
  
• Increases general fund operating support at public two-and four-year higher education institutions.
  
• Provides general funds for increased need-based financial aid for in-state undergraduates and to expand nursing, medical, and other health sciences education.
  

Economic Development

• Provides general and nongeneral funds for custom and discretionary economic incentive grant programs.
  
• Supports general funds for the Virginia Business Ready Sites Program and the Virginia Sports Tourism Incentive Grants Program.
  

Public Safety

• Provides general funds to support three basic trooper schools of 100 trooper candidates per class at the Department of State Police.
  
• Adds general funds to cover inmate medical costs.
  
• Allocates general funds to provide support for disaster management at the Department of Emergency Management.
  

Other Priorities

• Supports a two percent salary increase for state employees and state supported local employees in fiscal 2027 and an additional two percent salary increase in fiscal 2028.
• Provides additional general funds for the employer cost of increased state employee health insurance plan premiums.
• Provides general funds to support the Virginia Agricultural Cost-Share Program and the Water Quality Improvement Fund, while also making a deposit to the Stormwater Local Assistance Fund. 
  

Proposed Budget Information
Fiscal Years 2027-2028 Budget Proposal

Revenue Forecast

Budget Director's Presentation

Finance Secretary's Presentation

House Appropriations Committee Overview