Tag: Energy + Environment

By Markus Schmidt
Virginia Mercury

Back in January, Gov. Abigail Spanberger arrived in office promising pragmatism, affordability and a less combative style of politics.

Fast forward a few months, and Virginia’s first woman governor finds herself navigating one of the rockiest starts to a Democratic administration in years, with budget negotiations intensifying weeks before a shutdown deadline, frustration simmering inside her own party over a wave of vetoes and lawmakers openly questioning her governing style.

“I think it’s outrageous that we are where we are, and I hear from many legislators that they are displeased with the process,” Spanberger said during an interview with The Mercury at her office in Richmond Thursday, referring to the state’s still unfinished biennial spending plan.

“And I know that they are making that known to their individual bodies. And we will get there, because we have to.”

The impasse has overshadowed much of Spanberger’s opening months in office. Democratic leaders remain divided over whether to scale back Virginia’s lucrative data center tax incentives and how aggressively to regulate the fast-growing industry.

Lawmakers face a June 30 deadline to approve a spending plan before the new fiscal year begins July 1. Without a deal, Virginia could enter an unprecedented government shutdown.

The fight has also exposed tensions between Spanberger and some top Democrats in the legislature who expected a smoother relationship with a governor from their own party after four years of divided government under Republican Gov. Glenn Youngkin.

Spanberger vetoed or amended a series of high-profile Democratic priorities this year, including legislation tied to collective bargaining, cannabis retail sales, immigration enforcement, prescription drug pricing and class-action lawsuits. The pushback triggered unusually public criticism from key Democrats and labor advocates.

Political analyst Bob Holsworth said the administration’s first few months have been shakier than many Democrats anticipated.

“By and large, I think it’s been a wobbly term for sure,” Holsworth said. “We’ve never seen the kind of vetoes that we had before, and the Democrats are in a position that’s almost embarrassing in terms of the budget.”

Still, Spanberger rejects the idea that her administration so far has been defined mainly by conflict.

In the interview, she instead pointed to Democratic priorities she signed into law, including paid family and medical leave, maternal health legislation, healthcare affordability measures and an assault weapons ban. She also backed constitutional amendments protecting reproductive rights and marriage equality.

“I’ve signed more than 100 bills that Governor Youngkin had vetoed,” she said.

Richmond versus the rest of Virginia

Spanberger said one of the biggest surprises on the job has been the disconnect she sees between debates dominating Capitol Square and the concerns she hears while traveling the commonwealth.

“How different things are here in Richmond, or even Capitol Square, versus everywhere else in Virginia,” she said, recalling recent visits to Abingdon, Washington County, Blacksburg and Surry County during Virginia Agriculture Week.

“The things people are talking about at times are very, very different from the things that people are talking about in Richmond,” she said.

Spanberger said that disconnect has influenced how she approaches many of the biggest issues coming out of the General Assembly.

While progressive lawmakers pushed for sweeping changes on labor, environmental and criminal justice issues, Spanberger said she often evaluates legislation differently now as governor, focusing more heavily on implementation, agency capacity and long-term economic effects.

“It’s important to me that not only are we getting it right, but when there’s clear places and areas for improvement in terms of how we can set up state agencies or entities for that implementation, we need to make those changes,” she said.

Spanberger pointed to paid family and medical leave as an example of a policy she supports but also requires careful implementation.

“Virginia is the 14th state in the country to adopt a policy like this. It’s a policy that I think people are going to feel in a positive way, but it is a major shift, and we have to get it right,” she said.

But Holsworth said many lawmakers expected clearer guidance from the governor earlier in the legislative process, especially relating to the state budget.

“She could have been involved earlier there,” he said. “Typically governors really try to do a more determined job of setting the parameters of the budget early on.”

Holsworth also argued the tensions reflect ideological shifts within the Democratic Party of Virginia.

“Virginia’s always had these pro-business governors, Democratic or Republicans,” he said. “But the legislative branch of the Democratic Party has moved a little further to the left.”

The data center divide

Much of the budget dispute comes down to disagreements over Virginia’s sales and use tax exemption for data center equipment, an incentive credited with helping the commonwealth become the world’s largest data center hub.

Sen. Louise Lucas, D-Portsmouth, the chair of the powerful Senate Finance and Appropriations Committee, wants to eliminate the incentive, arguing the state is subsidizing highly profitable corporations while residents face rising utility costs and environmental concerns.

Last week, Lucas announced that she would take the data center debate directly to the voters, launching a statewide listening tour focused on the industry’s impact on communities statewide.

Stops are planned across Virginia, including Hampton Roads on Sunday, Richmond and Northern Virginia as lawmakers continue weighing whether the state should scale back billions of dollars in tax incentives for the rapidly expanding sector.

Spanberger, however, has taken a more cautious approach.

“What is less part of the discussion is the end goal,” she said, warning that abruptly dismantling the tax break could trigger lawsuits, damage Virginia’s business reputation and destabilize local governments heavily dependent on data center revenue.

“Look at Mecklenburg, where they’ve built multiple public schools fully with data center funding,” Spanberger said. “When you have localities with nearly half their local revenues coming in from data centers, there’s some localities that are saying, wait, why are you going to pull up the ladder behind you?”

At the same time, she said the industry should face stricter standards on energy consumption, water usage and environmental impacts.

“If energy generation and energy consumption is a problem — and I’ve been very clear that data centers need to pay their fair share as relates to energy consumption — well, how do we get there?” she said.

Spanberger argued Virginia still holds leverage because companies want to locate in the commonwealth.

“We have a pretty significant stance to be able to say we have these very high standards, and we want you all to meet them,” she said.

On Friday, the House released a new budget proposal that would preserve the existing sales and use tax exemption for data centers while creating a commission to study the industry’s long-term impact on Virginia’s power grid, water resources and economy.

The revised plan also eliminated earlier Senate-backed environmental requirements opposed by industry groups and some business advocates. Spanberger, who has repeatedly argued the state should “honor its commitments” to companies that invested in Virginia under the current incentive structure, praised the House approach Friday.

“This proposal creates a clear roadmap for evaluating the impact of the data center industry in Virginia and for reassessing the state’s incentives into the future, with a focus on fairness to ratepayers and the needs of local communities,” Spanberger said in a statement.

Meanwhile, Senate Minority Leader Ryan McDougle, R-Hanover, blamed Democrats broadly — and Spanberger specifically — for the ongoing impasse.

“She’s the governor and it’s her party,” McDougle said in an interview Friday. “She should take the blame.”

McDougle also criticized what he described as a lack of policy engagement from the administration during the session.

“My conversations with the governor during the legislative process were always polite and courteous, but nothing substantive about policy. I would expect such conversations would have a significant policy component, and I did not see that from my perspective. And we did not see representatives of the administration at many of the committee hearings and debates,” McDougle said.

Holsworth said the budget stalemate has exposed deeper tensions over Virginia’s economic identity.

“You have one group of Democrats, with Spanberger leading it, saying that if we do this, our ranking, as the best state for business, is really going to take a hit,” he said.

“On the other hand, you have Senator Louise Lucas and other people in the Senate, some Republicans included, saying, ‘Why in the world are we paying a couple of billion dollars a year to the richest people in the world as a tax exemption? We should get rid of it, or at least tone it down in some fashion.’”

Affordability and political pressure

Spanberger campaigned heavily on affordability last year, but acknowledged many Virginians still don’t feel economic relief.

“The measure of success keeps changing because all of the pressures that require us to work on issues of affordability and lowering costs keep getting worse,” she said.

She highlighted insulin cost reforms, healthcare changes involving insurance pre-authorization and housing measures she said will help residents more directly.

However, Spanberger acknowledged those gains collided with inflation and rising fuel prices.

“The progress we’re making is muted by the fact that there’s still pressures and bad policies that are negatively impacting people,” she said.

Republicans have repeatedly argued that Democratic policies are contributing to higher household costs.

McDougle said the governor’s policies contradict her campaign messaging on affordability and bipartisanship.

“She talked a lot about being for people and bipartisanness and affordability on the campaign trail. And then her initial policies, right out of the gate, were to raise everybody’s power bill through RGGI,” he said, referring to Democrats’ move to rejoin the Regional Greenhouse Gas Initiative.

The Spanberger administration pointed out that 75% of the governor’s “Affordable Virginia Agenda” passed with bipartisan support.

But Holsworth said Republicans moved quickly after Spanberger took office to define her politically before she could fully establish her governing identity.

“They went after her early, and I think they caught that team a little unaware,” Holsworth said. He added that many of Spanberger’s affordability initiatives may ultimately prove popular but are not tangible to many voters.

“The average person in the street knows that their electric bills and insurance bills are going up,” he said.

What comes after the budget

Even with the budget fight and criticism from some Democrats, Spanberger said she remains focused on longer-term priorities, particularly housing, childcare and administrative reforms.

“There’s more to do to continue to really push on the supply side challenge,” she said, referring to housing and childcare.

The governor is also closely watching Dominion Energy’s proposed merger with NextEra Energy, which would create one of the nation’s largest utility companies.

Spanberger said she sees possible benefits if the merger expands renewable energy production and lowers costs for ratepayers, but she also expressed concerns about long-term impacts on Virginia jobs and consumers.

“There also has to be some clear financial benefit for the fact that these two gigantic companies are endeavoring to merge to become even more enormous,” she said.

Spanberger also acknowledged that, as Virginia’s first woman governor, some reactions to her leadership may be shaped by expectations that previous governors did not face.

“I think that things are scrutinized differently, assumptions are made differently,” she said. “I might not be exactly in the model that people are used to.”

Still, she suggested that some of the criticism surrounding her first few months in office reflects discomfort with a governing style that does not fit traditional expectations of Virginia governors.

“The way that people will level critiques against me just objectively, they wouldn’t do it (to others),” Spanberger said. “They haven’t.”