WASHINGTON – While the capital region braces for the possibly devastating effects of sequestration, Virginia is mounting an offensive that could help to curb its negative impact on the local economy.

Gov. Bob McDonnell announced Wednesday that the commonwealth finished its fiscal year in June with a nearly $450 million surplus. This will allow the state to add $30 million to the Federal Action Contingency Trust Fund, which was created to prepare for federal spending cuts.

“Until things shake out in Washington and we know what’s happening with the budget process there, all we can do is basically put money in reserve and try to prepare and be ready,” he says.

Cuts to national defense and other federal spending would disproportionately affect Virginia, which houses enormous pools of active-duty military, civilian Defense Department employees and contractors, plus tens of thousands of federal workers.

Virginia would lose more than 207,000 jobs if the mandatory cuts take place, according to one study. McDonnell says that could reverse the state’s financial stability.

“With $470 billion in defense cuts this year and another $500 to $600 billion over the next 10 years, the impact on Virginia would be dramatic,” he says.

Despite the looming concerns, state employees will receive a 3 percent bonus in December thanks to the surplus.

WTOP’s Hank Silverberg contributed to this report. Follow Hank Silverberg and WTOP on Twitter.

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