Virginia State Budget FY2027 Analysis

Virginia spent $207.0 billion across all funds in FY2027, or $23,311 per resident. All-funds spending counts the general fund, federal grants, and dedicated state funds together — the fairest basis for comparing states, since they differ widely in how much they route outside the general fund.

The general fund — the discretionary portion the legislature actually debates — was $75.0 billion, or 36.2% of total spending. The remainder is largely federal grants (Medicaid above all) and dedicated revenues such as fuel taxes earmarked for highways.

Reserves in the rainy day fund stood at $4.7 billion. Because nearly every state is constitutionally required to balance its operating budget, reserves rather than borrowing are how states absorb revenue shortfalls in a downturn.

Virginia's 2026-28 biennial budget was finalized only on June 29-30, 2026 — a day and a half before the old biennium's funding expired — when the General Assembly adopted all 14 of Governor Abigail Spanberger's amendments, ending a months-long impasse in her first year. The roughly $207 billion plan carries $75 billion in general fund resources, up from the $71.3-71.5 billion available in the introduced bill. Its centerpiece is education: $2 billion in new K-12 funding billed as the largest such investment in state history, 4% raises for teachers and school staff in each year (3.5% for state employees), $577 million for childcare and early learning, and $349.7 million for higher education including tuition moderation and HBCU support. The budget's most distinctive revenue move is a first-in-the-nation energy consumption tax on data centers, projected to raise about $600 million a year — about $1.2 billion over the biennium — leaning on the industry concentrated in Northern Virginia to fund pay raises and contingencies. Federal exposure shapes the whole document: a $350 million Medicaid Reserve Fund, a new $225 million Federal Contingency Fund and $150 million in ACA premium assistance hedge against Washington-driven cuts in a state unusually dependent on federal employment and spending. Reserves remain a strength — Virginia closed FY2025 with $4.7 billion in its rainy-day fund plus a $1.7 billion cash reserve, and budget plans maintain combined reserves around 15% of certified revenues.