Virginia General Assembly meets today to consider budget with $600M data center fee and $7 million for a Charlottesville transitional facility for the unhoused

There are nine days left until Fiscal New Year and there’s plenty of time to get your resolutions together. Time has been running out for the Virginia General Assembly to finalize a budget for the year but the way now seems to clear for that to be done in time.

Negotiators in the House of Delegates and Senate agreed on June 19 on a conference report that combines the budgets from each chamber into one.

“We appreciate the hard work of the conferees, staff, and our colleagues in both chambers who helped make this agreement possible,” reads a joint statement from Senate Finance and Appropriations Chair Louisa Lucas and House Appropriations Chair Luke Torian. “We look forward to passing this conference report and sending it to Governor Spanberger’s desk.”

The budget impasse had to do with whether an existing tax exemption for data centers should be ended earlier than expected. The Senate wanted to sunset the exemption but the House wanted to keep it in.

The compromise version would levy a Data Center Electricity Consumption Tax of $0.011/kWh per month. This tax is only enabled for the next two years.

The details can be seen on page 323 but this tax is described as “the amount that each data center operator shall pay for each kWh used pursuant to this Item, regardless of whether the electricity is provided through an incumbent electric utility, an incumbent electric cooperative, a competitive service provider, or is self-supplied.”

The State Corporation Commission will collect the tax. No more than $600 million of the proceeds shall go to the general fund. The rest would go to a fund to be paid back to data center operators in the form of a refund.

An amendment in the budget agreement would also direct the Joint Subcommittee on Tax Policy to study data centers before the 2027 General Assembly.

Other highlights:

• The City of Charlottesville will receive $7 million a “transitional housing and life skills training facility to increase capacity to serve individuals and families experiencing homelessness in the community.” This is not specified in the budget and a question is out to the City.
• There is an additional $3 million in support of the Virginia Institute of Biotechnology at UVA” which has had a total of $85 million in general fund support.
• The University of Virginia would receive half a million “to develop the Commonwealth Artificial Intelligence Institute to coordinate with other universities and stakeholders to develop a statewide ecosystem in AI.” (page 113)
• This budget allows all localities in Virginia to hold a referendum on a one percent sales tax for school construction. The language states that “such referendum shall be ordered at least 105 days prior to the final election date set for such referendum” which clears the way for a ballot question this year. November 3 is 134 days away from today.
• The budget expects $35 million in revenues from a Cannabis Sales and Excise Tax in FY2028. There can be 350 stores across the Commonwealth and they can open July 1, 2027.
• Another $44,780,000 in revenues are forecast through the sale of state property. That includes the Augusta Correctional Center in Craigsville.

The Senate convenes at 10 a.m. and the House of Delegates convenes at 2 p.m.

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