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ICYMI: General Assembly budget proposal expected to generate $600 million a year in revenue from data centers
Virginia lawmakers are moving to tax data centers’ electricity use under a budget conference report unveiled this week, a measure expected to generate $1.2 billion over the two-year state budget cycle.
The provision, included in the conference report just released by the House and Senate, would charge data centers $0.011 per kilowatt-hour of electricity consumed each month. Collections would be capped at $600 million annually; any amount collected above that cap would be refunded to data center operators on a prorated basis after the fiscal year ends. The definition of “data center” used in the bill is written to exclude telecommunications companies.
The fee is projected to bring in $600 million in fiscal year 2027 and another $600 million in fiscal year 2028.
The measure comes as Virginia, home to the world’s largest concentration of data centers, faces growing scrutiny over the industry’s strain on the electric grid and water supplies, particularly in Northern Virginia’s “Data Center Alley” in Loudoun County.
As a result, the debate over forcing data centers to contribute more money to the commonwealth has been the main topic of all budget negotiations.
The Senate wanted to eliminate the sales and use tax break that data centers are set to receive through 2035. The House and the governor did not want to go back on that commitment.
That tax break remains, but the Senate did get its pound of flesh with the energy consumption fee.
Va. budget deal emerges with energy consumption tax on data centers - RTD
by Michael Martz and Dave Ress
irginia budget negotiators have a deal for a new two-year spending plan on July 1 that resolves — at least temporarily — an increasingly bitter debate between Democratic leaders about how the state should tax and regulate data centers.
The budget compromise emerged late Friday with a proposal to impose a new version of an existing tax on energy consumption for data centers, which have become a big part of Virginia’s economy while rousing intense opposition in communities over the electricity and water they consume, as well as uneasiness with the artificial intelligence revolution they make possible. It also includes raises of 4% each year for teachers and 3.5% for state employees and state-supported local employees.
Campaign finance audits survive House-Senate budget - Poole Report
by David Poole
State audits of the campaign finance reports filed by 2025 political candidates, including Gov. Abigail Spanberger and House Speaker Don Scott, will continue as planned.
A House-Senate compromise budget released Friday evening removed language that sought to abolish a 2022 law that authorizes the Department of Elections to verify the accuracy of campaign finance disclosures.
