Spanberger meets with Virginia budget negotiators to jumpstart talks (copy) (copy)
Gov. Abigail Spanberger met separately with Senate and House budget negotiators Wednesday morning to jumpstart stalled talks on a new two-year spending plan as the Democratic-controlled General Assembly faces a Saturday deadline for completing its work and adjourning the 60-day legislative session.
Budget conferees have not met for negotiations since a Friday morning breakfast meeting with the governor, due to a Senate proposal to repeal a 16-year-old sales tax exemption for data centers that has made Virginia, particularly Northern Virginia, the global center of the fast-growing industry.
Spanberger and the House oppose a repeal of the tax exemption without discussions with the data center operators who relied on the tax break in deciding to locate or expand their operations in Virginia.
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In an impromptu media briefing on Capitol Square on Wednesday, the governor framed the budget debate as "the basic issue of fairness" and raised, for the first time, a potential "consumption tax" on large energy users.
"I think everyone broadly agrees that data centers should be paying their fair share, and certainly I think that's central to the discussion right now that is existing within the House and the Senate in terms of what does that mean?" she said. "And so the larger conversation of the businesses we've attracted to Virginia, the value of local revenue that they bring in, all of those have to be part of this important conversation."
"So if the issue is, how much energy are data centers using, well, should there be a consumption tax to make sure that they are quite literally, paying their fair share when it comes to the energy consumption?" the governor said. "And so for me, I think an important principle, yes, data centers should pay their fair share. And I think that the Commonwealth of Virginia should also abide by contracts that we sign."
House Appropriations Chairman Luke Torian, D-Prince William, who has expressed frustration over the failure of the conference committee to meet, also confirmed the meeting between Spanberger and Senate conferees, but added, "I have no indication from the Senate that they intend to sit down" with the House. The governor later met separately with House budget negotiators.
Senate President Pro Tempore Louise Lucas, D-Portsmouth, who chairs the Senate Finance & Appropriations Committee, has not returned requests for comment, but has relied on social media to communicate her determination to repeal the data center tax exemption, regardless of opposition by the House and governor.
In a post on X on Tuesday, Lucas said, "I beg to differ with anyone who says that it's on me to meet to discuss this budget because I delivered a budget that makes life more affordable by ending a tax giveaway to big tech. The Governor and Chairman Torian have drawn a red line!"
Spanberger and the budget chairs are all Democrats, but Lucas sought in a later post on X to link the data center tax exemption to Gov. Glenn Youngkin, a Republican who built his legacy on $157 billion in new capital investment in Virginia, almost 80% of it from data centers.
"Let me be clear. There will not be a budget with Glenn Youngkin's Data Center tax breaks in it," she wrote in a post Tuesday afternoon. "Glenn drove up YOUR utility bills to give tax breaks to data centers. Strong as battleship steel, I will fight for affordability for the people and encourage Gov. Spanberger to join me."
In her first legislative session since becoming governor on Jan. 17, Spanberger has focused on making life affordable for Virginians, including the cost of electricity for homes and businesses. Much of the legislation session has revolved around potential limits on data centers, including conditions on continuing to receive the tax exemption on computer servers and software they purchase to "refresh" existing equipment.
"I've been working with the House and Senate to make sure they know my priorities and my red lines," Spanberger told The Richmond Times-Dispatch on Monday afternoon.
On Wednesday, Spanberger played down the long delay in meetings of the budget negotiators with the Saturday deadline looming for adjourning on time.
"Over in the General Assembly, everybody is talking to everybody all the time," she said. "So I do think that those conversations are ongoing."
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Read the stories from the Richmond Times-Dispatch's three-day series on data centers and the key issues they pose.
Michael Martz (804) 649-6964
