Virginia General Assembly approves Spanberger’s budget amendments, ending monthslong impasse
The Virginia General Assembly approved budget amendments, including a new statewide electricity-consumption tax on large data centers and new water-conservation requirements. This policy aims to ensure the data center industry contributes more to its energy demands and infrastructure costs, balancing industry growth with state and local financial realities.
The Virginia General Assembly has approved Gov. Abigail Spanberger's budget amendments, ending a months-long standoff and establishing a new statewide electricity-consumption tax on large data centers. The approved $207 billion biennial budget aims to make the data center industry contribute more towards the energy demands and infrastructure strain caused by its rapid growth in the commonwealth.
While preserving the existing sales and use tax exemption for data centers, the budget introduces a temporary energy-consumption tax for facilities exceeding specific electricity-use thresholds. Senate Majority Leader Scott Surovell stated that the data center industry is expected to contribute between $1.1 to $1.2 billion to the state government for the biennium. Additionally, the budget includes new water-conservation requirements for data centers operating in groundwater management areas.
Divisions within the Democratic majority characterized the budget negotiations, with Senate Finance Chair Louise Lucas advocating for more aggressive taxation to address the industry's costs. Conversely, House Democrats and industry representatives cautioned against measures that could deter future data center development, citing the significant revenue local governments derive from the sector.
House Speaker Don Scott noted public sentiment ties data centers to rising utility costs and development pressures. The final agreement also allocates funding for education, healthcare, transportation, and flood mitigation, alongside a provision for Dominion Energy customers to receive a monthly rebate from the Regional Greenhouse Gas Initiative. Republicans criticized the budget's delayed passage but supported certain provisions, including teacher pay raises.