Virginia budget approved after data center tax compromise
Virginia lawmakers approved a state budget after reaching a compromise on data center taxation, averting a government shutdown. The agreement preserves existing tax breaks but introduces new taxes expected to generate $600 million annually from data centers. This revenue will contribute to the general fund and support initiatives like teacher salary increases.
Virginia lawmakers successfully approved a state budget, narrowly avoiding a government shutdown, after reaching a critical compromise on data center taxation. The debate centered on Governor Abigail Spanberger and House lawmakers' insistence on maintaining promised data center tax breaks, while the Senate aimed to eliminate them, foregoing billions in potential tax relief.
The final agreement allows the existing tax breaks to stand but introduces new taxes on data centers, projected to generate approximately $600 million annually. This is expected to contribute $1.1 billion to the general fund over two years.
Republican Sen. Glen Sturtevant criticized the budget, arguing it failed to adequately address the financial burden on average Virginians who he believes subsidize data centers' electricity and water usage. Conversely, Democratic Senate Majority Leader Scott Surovell lauded the new tax as a significant contribution from data centers, enabling a 4% increase in teacher salaries and delivering on affordability for Virginians. Governor Spanberger also affirmed the budget's commitment to strengthening schools, expanding economic opportunity, and positioning Virginia as a national leader in data centers.