(The Center Square) – Gov. Glenn Youngkin signed off on Virginia’s updated two-year budget, approving $1 billion in tax relief and $4.2 billion in new investments while rejecting 37 spending items to retain a $900 million surplus cushion.
The governor said the amended budget, shaped around a projected $3.2 billion revenue surplus, balances record investments in education, healthcare and infrastructure with fiscal caution as the state braces for economic uncertainty tied to federal spending and trade policy shifts. Youngkin plans to revisit the vetoed items later this year if revenue projections hold, telling lawmakers he plans to propose a follow-up budget in December.
Youngkin warned against spending the entire surplus now, saying even a small forecasting error could blow a hole in the budget.
“To be clear, I see a path to meeting the 2026 forecasts, but in these scenarios, given the fact that we have the law of large numbers working here— if there’s a 1% miss, it’s $300 million,” he said. “If there’s a 3% miss, $900 million.”
Of the $3.2 billion projected surplus, the amended budget uses:
$1 billion for tax relief$2.9 billion in carryover funds and new spending for shared priorities$900 million held back as a cushion in case forecasts fall short
Major investments include:
$834 million for K–12 education, including $223 million to lift support caps$235 million for higher education$686 million for Medicaid and $100 million for the Children’s Services Act$25 million for drinking water upgrades and $50 million for disaster response$12 million for maternal health
Youngkin said roughly $691 million in delayed capital projects were being held back as a safeguard, with the vast majority tied to public colleges and universities still in early planning stages.
Youngkin said $691.3 million in delayed capital projects were being held back as a safeguard, with the vast majority, or 77%, according to documents, is tied to public colleges and universities still in early planning stages.
An example includes nearly $99 million for utility infrastructure at William & Mary’s law school complex and $47 million for a science and engineering building at George Mason University, which he said were not ready to move forward.
Youngkin noted that about $500 million in previously approved capital projects had already drawn down funding and would move forward as planned.
He said many of the delayed projects already have planning money, and he expects to revisit the funding in the next session. “We are providing the general assembly the opportunity in January to pick them back up. We will be able to use either cash resources or bonding in order to make sure that these projects continue on their current timeline,” Youngkin said.
