Why Virginia still doesn't have a budget
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An aerial view of a data center in NoVa. Photo: Andrew Caballero-Reynolds/AFP/Getty Images
Virginia lawmakers blew past a key deadline to finalize the state's two-year budget, and the holdup came down to a billion-dollar question: Should data centers keep their massive tax break?
Why it matters: The exemption saved the data center industry between $1.6 billion and $1.9 billion in taxes in fiscal year 2025.
The big picture: Senate Democrats want the exemption gone by Jan. 1 — about eight years earlier than the initial 2035 expiration date — while House Dems want to keep it, as long as data centers move away from fossil fuels.
- In Virginia, data centers that invest $150 million and create at least 50 jobs are currently exempt from paying sales and use tax on their computer equipment.
Zoom in: The Senate says ending the tax break would allow for more revenue to go toward education, infrastructure and more, reports the Virginia Mercury.
- Meanwhile the House argues that killing the exemption could cost Virginia its dominant position in the data center industry, which supports thousands of jobs, and its reputation as a reliable place to do business.
The intrigue: The union representing many of the state's electrical workers have been vocal defenders of the tax breaks.
- Many came to Richmond to urge lawmakers to keep them, saying the data center boom has allowed them to earn more and work close to home, per the Mercury.
Yes, but: Senate President Pro Tempore Louise Lucas, who chairs the powerful Senate Finance Committee, has repeatedly said she won't send a budget to Gov. Spanberger with the tax breaks in it.
- Lucas has also hinted at clashing over it with Spanberger, who told reporters last Wednesday that she "won't be negotiating with [Lucas] in the press."
What's next: The General Assembly will reconvene April 23 to hash out the budget.