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Tag: House of Delegates

  • Virginia House, Senate leaders reach budget deal, chambers to meet Monday

    Virginia House, Senate leaders reach budget deal, chambers to meet Monday

    By Samantha Willis
    Virginia Mercury

    Lawmakers, who will meet at the state Capitol on Monday, June 22, have closed in on a budget deal. (Photo by Charlotte Rene Woods/Virginia Mercury)
    Lawmakers, who will meet at the state Capitol on Monday, June 22, have closed in on a budget deal. (Photo by Charlotte Rene Woods/Virginia Mercury)

    After months of debate and an increasingly fraught battle over how to tax and regulate data centers, Virginia budget negotiators announced Friday evening that they’d reached a deal featuring a new energy consumption tax for the industry that’s expected to generate $1.2 billion over the biennium.

    The new plan also includes 4% raises for teachers each year, and roughly $285 million for health insurance from the state marketplace and food assistance funding for low-income families. It will also give localities authority to impose a 1% sales tax for school construction and renovation, if they choose. Nearly $1 billion has been allocated in the revised budget as contingency reserve to cover anticipated gaps from reduced federal funding.

    The Virginia House of Delegates will convene Monday afternoon in Richmond and the state Senate will meet the same day, as both chambers vote to finalize the budget, which will take effect July 1.

    “This budget agreement reflects our shared commitment to making Virginia more affordable for families,” Sen. Louise Lucas, D-Portsmouth, and Appropriations Chair Del. Luke Torian, D-Prince William, said in a joint statement.

    “At a time when too many households are feeling squeezed by rising costs and economic uncertainty, this conference report makes historic investments to lower costs, strengthen our schools, protect access to healthcare, expand economic opportunity, and maintain the Commonwealth’s strong fiscal foundation,” they added.

    The House had been scheduled to meet last Thursday but Speaker Don Scott, D-Portsmouth, canceled the session, citing budget negotiators’ failure to reach an agreement. By Thursday, leaders in both bodies had signaled negotiations were progressing and legislators were closing in on a deal, the Richmond Time-Dispatch reported.

    Senate budget proposal keeps data center sales tax exemption, adds new tax for industry

    The issue that paralyzed the process for weeks was whether data centers should continue to be exempt from paying sales and use tax. Lucas proposed eliminating the exemption and was the most fierce defender of that stance until last week, when the Senate released an updated budget that removed the provision to revoke the exemption,

    Lucas instead pitched a tiered tax for data centers based on their generator use and traveled statewide in recent days, drumming up public support for her chamber’s plan to levy more costs onto data centers, which they said would net the state $1.8 billion.

    “We know technology is not bad,” Lucas said Tuesday on a tour stop in Chesterfield. “You know, we all can benefit from technology, but we, as a government, have not done a good job in managing the regulations and the impact on our communities and that’s what we’ve got to rein in.”

    The House released a reworked budget proposal last Friday that stripped environmental stipulations the body had previously recommended but preserved the tax exemption for the digital facilities that now number in the dozens statewide.

    The House and Senate both released new budgets. Here’s how they align and diverge.

    The Senate is set to gavel in at 10 a.m. Monday and the House will convene at 2 p.m.

    Editor’s note: This story has been updated to include details from lawmakers’ budget deal, released Friday evening. Stay tuned for The Mercury’s in-depth budget coverage this week.

  • Amid budget battle, legislators pass the buck on concrete data center reforms. Again.

    Amid budget battle, legislators pass the buck on concrete data center reforms. Again.

    By Ivy Main
    Virginia Mercury

    The House of Delegates, pictured here on the final day of the 2026 legislative session, proposed a revamped budget stripped of environmental standards data centers would have had to meet to keep their sales and use tax exemption. (Photo by Markus Schmidt/Virginia Mercury)
    The House of Delegates, pictured here on the final day of the 2026 legislative session, proposed a revamped budget stripped of environmental standards data centers would have had to meet to keep their sales and use tax exemption. (Photo by Markus Schmidt/Virginia Mercury)

    Oh yay, another commission.

    Leaders in the House of Delegates are continuing to tweak their version of a state budget, but they aren’t backing down from their fight with the Senate over data centers. What they are backing down from is their former insistence that data centers use clean energy. Instead, they propose to punt this and every other data center issue over to a commission.

    Is that supposed to resolve the budget impasse? Because if that’s the idea, it sure seems like an odd way to go about it.

    New House budget strips environmental standards for data centers, creates commission instead

    Recall that Senate Finance Chair Louise Lucas, D-Portsmouth, wants to terminate the sales tax exemption that data centers have exploited to the tune of $1.6 billion lost from state coffers. (The total subsidy rises to $1.9 if you include the exemption from local taxes, but what’s a few hundred million bucks among friends?)

    The tax isn’t something specific to data centers. It’s the same one all the rest of us pay. The argument that there are better ways to spend the money than to give it away to the world’s richest corporations has reaffirmed Lucas as a bonafide social media star at age 82, and she is enjoying it very much.

    In response to the new House budget proposal, Lucas tweeted out a tweak of her own: She now proposes to subject data centers to a nearly-equivalent fee that would generate $1.7 billion in revenue. Lucas and allies have launched a “listening tour” to build support for her approach.

    But the House budget does not eliminate the exemption, leaving the two sides at an impasse.

    The House is set to reconvene on June 18, and the Senate on June 22. The chambers will attempt to resolve their differences and adopt a budget before July 1 to avoid a government shutdown.

    House leaders argue that data center operators relied on this tax exemption when they chose to locate in Virginia. They signed memorandums of understanding agreeing to a few minor conditions, and in return they were promised they wouldn’t have to pay sales tax on computer chips and other equipment until 2035. (In the case of Amazon and any other corporation that sinks $50 billion into data centers in Virginia, the date has been extended out to 2045.)

    But the House budget proposal originally incorporated provisions drawn from legislation introduced by Del. Rip Sullivan, D-Fairfax, requiring data centers that take advantage of the tax exemption to buy increasing percentages of renewable energy, refrain from using onsite fossil fuels as their primary energy source, and begin phasing out the backup diesel generators that threaten air quality. The bill passed the House but died in the Senate around the same time Lucas decided there shouldn’t be a tax exemption at all.

    The disagreement left Virginia without a budget for the new year. Now suddenly the House has issued a new proposal that has the support of Gov. Abigail Spanberger. Instead of resolving the impasse, though, it actually goes backwards on regulating data centers.

    It still leaves the tax exemption intact, but now “includes explicit direction for the establishment of a Commission to thoroughly evaluate the direct and indirect costs and benefits of the data center industry.” The commission is to issue a report and recommendations for legislative and budgetary changes, which the General Assembly will then consider next year.

    Are you feeling a little prickle of déjà vu? That’s because we have seen this before, and not very long ago. In December 2023, the General Assembly headed off action for all of 2024 by directing the Joint Legislative Audit and Review Commission (JLARC) to assess the impact of the industry on energy demand, state revenue, natural resources – essentially, the same things this year’s commission is supposed to look at all over again.

    You remember the JLARC report. It sounded a dire warning against the consequences of “unconstrained” data center demand. The report made a stir in December of 2024 when it was issued. Statements were released, proposals were floated.

    And thus warned, the General Assembly went into the 2025 session and did . . . nothing.

    Doing nothing pretty much described 2026 legislative action on data centers, as well. Among the few reforms House and Senate Democrats seemed to agree on were that data centers needed to buy renewable energy and storage to limit the increase in Virginia’s carbon emissions and to decrease the pollution from diesel generators. The House did this by way of Sullivan’s bill; the Senate supported a different approach. Each chamber killed the other’s bill.

    That left the House budget as the only vehicle for progress this year on one of the central problems of the data center buildout. By backtracking now, House leaders and the governor show they are willing to capitulate entirely to the data center industry and its labor allies.

    Workers, Speaker Scott criticize plan to axe data center tax exemption as budgets advance

    To be sure, a budget amendment this year that puts conditions on tax exemptions in future years would need to be followed with new legislation to lock in the requirements. And for that purpose, House and Senate members should definitely work together this summer to align their proposals, ensuring both chambers agree on the terms of the legislation before it is introduced.

    A commission with that task could be useful. After all, the Commission on Electric Utility Regulation, now rebranded as the Energy Commission of Virginia, succeeded in bringing together House and Senate members around a striking number of good energy bills this year.

    But a commission that is thrown together suddenly and instructed to retrace the steps of a report issued barely 18 months ago seems suspiciously like a substitute for action.

    This is all too familiar. When it comes to data centers, inaction seems to be the point.

  • New House budget strips environmental standards for data centers, creates commission instead

    New House budget strips environmental standards for data centers, creates commission instead

    By Shannon Heckt
    Virginia Mercury

    Speaker of the House Don Scott, D-Portsmouth, presents the chamber's latest budget proposal on June 12, 2026 in downtown Richmond. (Photo by Shannon Heckt/Virginia Mercury)
    Speaker of the House Don Scott, D-Portsmouth, presents the chamber's latest budget proposal on June 12, 2026 in downtown Richmond. (Photo by Shannon Heckt/Virginia Mercury)

    Speaker of the House of Delegates Don Scott, flanked by Appropriations Chair Del. Luke Torian, D-Prince William, and other bipartisan house members, unveiled the chamber’s latest budget proposal in Richmond on Friday, which they framed as a “compromise package” that they urged the state Senate to accept.

    The updated spending plan no longer includes environmental standards data centers would need to meet in order to be exempted from the state’s sales and use tax, an issue that has stalled budget negotiations for weeks and sparked speculation about a government shutdown if the parties can’t finalize the budget by June 30.

    “This budget comes through for Virginians in a real and meaningful way without introducing a single new tax,” Torian said in a statement. “It anticipates future federal funding cuts by establishing a reserve – so when Washington turns its back again on Virginians we are prepared to step in.”

    The dueling House and Senate budget proposals differ over whether data centers should continue to be exempt from the state’s 5.3% sales and use tax. State data shows the industry saves about $1.6 billion annually through the exemption, money Senate lawmakers say the state should recoup by ending the tax break.

    Data centers have to routinely upgrade and replace pricey computer equipment, which is the bulk of where they save with the exemption.

    The new House proposal removes the previous measures that would have mandated developers limit data centers from co-locating with power facilities that emit carbon emissions.

    Here’s what House lawmakers want to require of data centers to keep their sales tax break

    The previous proposal also outlined energy efficiency requirements for the digital warehouses, including using newer backup generator models that emit less carbon.

    The new House budget instead proposes creating a commission of stakeholders and lawmakers to study the impacts and benefits of the data center industry in Virginia.

    The commission would be required to report to the General Assembly by Nov. 1 on ways to ensure energy demands don’t put extra costs onto residential utility customers. The commission would also scrutinize local tax revenue impacts and “other ways to generate revenue from the industry”.

    “(It will be a) full investigation into energy costs, financial impacts, air quality, water conservation, renewable energy, and community impacts,” Scott said, “So the 2027 General Assembly can pass real national reform. Or if the governor would like, we could come back right after that report … for a special session.”

    Scott has staunchly supported preserving data centers’ exemption, he said, because of the local tax revenue the centers generate and the union jobs that come with the construction of the facilities.

    Workers, Speaker Scott criticize plan to axe data center tax exemption as budgets advance

    Gov. Abigail Spanberger has also publicly supported keeping the exemption, saying the state should “honor its commitments” to businesses that have located in the commonwealth. She praised the updated House budget on 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.

    Senate members’ response to the updated House budget was unclear Friday afternoon, with no comment from Finance Chairwoman Sen. Louise Lucas, D-Portsmouth.

    Lucas has been adamant about ending the tax exemption for data centers since the Senate spending plan was introduced earlier this year.

    “I want (the money) to go towards hard working families. We’ve got people who are struggling to put food on the table, to put a roof over their heads, pay for their car payment, their kids school. I want that money to go back to them,” Lucas said then.

    The House is slated to return to Richmond to debate this proposal on June 18, while the Senate, who has not yet released an updated budget proposal, will return on June 22. If a budget is not passed by the end of the month, state services and employee pay will be interrupted.