Gov. Abigail Spanberger and House Democrats are on the same page with a do-nothing approach to data centers that they hope will continue the $1.9 billion annual tax breaks that go to developers of hyperscale data centers in Virginia.
“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 Friday statement issued by her press office, less than an hour after House leaders unveiled their proposal to get toward agreement on a state budget for the 2026-2028 biennium.
ICYMI
- Spanberger seems to be trying to split hairs on data center tax incentives
- Louise Lucas to the ‘Data Center Diva’: No more tax breaks for data centers
- We don’t like data center tax breaks: But there’s more to it than that
The impasse is over one issue – the tax breaks for what we call hyperscale data centers, which Louise Lucas, the chair of the Senate Finance & Appropriations Committee, has made her line in the sand.
The tax breaks are set to expire in 2035; Lucas wants them gone next year.
Hyperscale data centers are loosely defined as being at least 10,000 square feet, using at least 5,000 servers, and consuming more than 50 MW of power annually – for a sense of scale, a 50 MW supply is enough to average out the daily needs of 30,000 to 50,000 homes.
We’ve got more than 150 of these massive data centers in Virginia – more than 35 percent of all of the hyperscale data centers worldwide – and really, it seems like we’re just getting started, even as the reality is, outside the developers and suits in local and state government, nobody seems to want to have anything to do with the things.
The Spanberger/House Democrat proposal tries to kick the can down the road on the issue with the “establishment of a Commission to thoroughly evaluate the direct and indirect costs and benefits of the data center industry, with a report and recommendations for legislative bill and budgetary changes to address financial, energy, and air/ water/noise impacts in time for consideration by the 2027 General Assembly.”
This is what you do when you want to look like you’re offering a compromise – hey, let’s study it, come up with a report, then we can talk about it again next year.
Basically, that’ll shut ‘em up.
At this writing, we’ve got 18 days to get a state budget in place.
The House is set to meet on June 18 to discuss its budget proposal, with the Senate scheduled to meet on June 22 to review its budget.
In the meantime, Lucas has announced a “Data Center Listening Tour” with events on Sunday (Hampton), Tuesday (Chesterfield) and Wednesday (Virginia Beach) that, knowing her approach, will get some media attention.
Update: Friday, 3:30 p.m. We got a press release from the Virginia House Democratic Caucus this afternoon with statements from House Speaker Don Scott and Appropriations Chair Luke Torian on the House budget proposal – notably, the statements didn’t address the data center issue.
“Virginia’s families cannot wait – and we will not make them wait,” Scott said. “This budget is our promise kept. To the teacher. The trooper. The firefighter. The parent, just trying to make ends meet. With this budget, we are building the place we all know Virginia can be – and has always been destined to be. The best place to live, to work, to play, and to raise a family.”
“This budget comes through for Virginians in a real and meaningful way without introducing a single new tax,” Torian said. “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.”
Update: Friday, 3:34 p.m. One other press release to add to the reporting here – from a coalition of environmental groups obviously not happy with the stuff about data centers.
The statement from the group, which included
- Michael Town, executive director, Virginia League of Conservation Voters
- Connor Kish, director, Sierra Club Virginia Chapter
- Walton Shepherd, Virginia director, NRDC
- Vic Higgins, Virginia director, Chesapeake Climate Action Network Action Fund
“Virginians overwhelmingly are concerned and outraged by the impact that data centers are having as they face rising electric rates, and as they grapple with constant noise, dirtier air, water scarcity, and changes and threats to the fabric of their communities being brought on by this industry.
“Today, the House of Delegates released a budget proposal that backtracks from the proposal previously adopted by the House to hold the data center industry accountable to cleaning up its act and the Governor’s commitment that the industry pays its fair share.
“The time to study this issue further has passed. Across the country, Blue and Red states alike are taking decisive action by passing stronger regulations, raising taxes on, requiring more accountability from, and holding the industry to clean energy standards. Virginia, the data center capital of the world, had an opportunity to lead on this issue nationwide. Now, we urge our state leaders to at least follow the lead of others and require the data center industry to abide by clean energy standards and to cover the costs of energy infrastructure now being unfairly shouldered by Virginia voters.
“We urge the Senate, House and Governor to do the hard work voters expect of them and enact a budget that benefits the people over corporations.”
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Chris Graham
