Illustration by Kyle Talley
Virginia’s new governor-elect can ditch the shades, at least. Economically speaking, the future isn’t so bright.
Ten months of federal spending cuts and job losses are piling up, likely pushing Virginia’s unemployment rate past 4% by year’s end. Meanwhile, Virginia’s GDP is expected to finish the year at a meager 0.6%, according to the most recent economic forecast from the Weldon Cooper Center for Public Service at the University of Virginia. Next year, it’s likely to be even worse.
What’s a new governor to do? Perhaps follow the paths taken by metro Richmond’s financial stalwarts — Chesterfield and Henrico counties.
“We just started throttling back the pace of budget growth [to] what we feel like we can reasonably sustain,” says Matt Harris, Chesterfield County’s deputy county administrator for finance and administration. This year, the county put more than $50 million in bond issuances on hold and scaled back hiring for new positions. Chesterfield also increased its rainy-day fund from 8% to 10% of the general fund.
“We’re just being appropriately cautious,” Harris says. “Uncertainty is not our friend, and we’re just covered in it right now.”
In Henrico, County Manager John Vithoulkas launched a new “fiscal wellness committee” staffed with 20 members representing just about every county agency. The goal? Identify $12 million in cost savings. Surveys seeking ideas for where to cut were sent to every county employee.
“Managers aren’t the only ones with good ideas for cost-cutting,” says Sheila Minor, Henrico’s finance director. “We started in August and we’re hoping to have our ideas on paper by the end of [October].”
With Virginia staring at a significant economic slowdown in 2026 and the persistent threat of federal funding and job cuts, exacerbated by the recent government shutdown, Vithoulkas says Henrico is being “ultra conservative” when it comes to budgeting revenue from the feds and the commonwealth.
“The state is not going to be in a good place because of the job losses in Northern Virginia and the impacts of not having a government,” he says. “When it comes to state aid, we are going to be super cautious for what we estimate this year for all of our programs — including schools.”
