RICHMOND, Va. — The General Assembly met briefly Thursday for a special session, but they left without a budget deal in place.

“No white smoke,” Senate Finance and Appropriations Chair Louise Lucas, D-Portsmouth, told reporters Wednesday. That’s a reference to the process of selecting a new Pope — when the smoke pouring out of the Sistine Chapel is black, deliberations are ongoing. White smoke means a new Pope has been chosen.

“We’ll have a budget by June,” added House Speaker Don Scott.

The problem is the legislature is divided over if and how to tax data centers. Currently, data centers are exempt from paying the state’s 4.3% sales and use tax, which could generate more than $1 billion in revenue. This is an intraparty fight between Democrats, who have a trifecta of power in each chamber and the governor’s mansion.

“In the House, we are awaiting some communication from the Senate to let us know that we are ready to sit down do our side-by-sides on the budget,” House Appropriations Chair Luke Torian, D-Prince William, told reporters Wednesday.

When the legislature adjourned from the 2026 session last month, leadership on the General Assembly money committees said they would hear out data center proposals and work to arrive out an agreement. Lucas said the data center industry had proposed paying $1.1 billion over the biennium, but she said that wasn’t good enough.

“There’s not going to be a cap,” she said. “I want this to be perpetual and ongoing.”

The Data Center Coalition confirmed the industry had offered two proposals, the most recent of which would provide $1.1 billion in new state revenue over the biennium. Josh Levi, the organization’s president, said the most recent proposal also offered hundreds of millions in recurring revenue after.

“The data center industry remains open to working with Governor (Abigail) Spanberger and members of the House and Senate on an approach that advances their respective goals, keeps Virginia competitive for investment, and allows the Commonwealth to honor the commitments that produced $80 billion of investment and $5 billion in tax revenue in just the last two years,” Levi said in a statement. “These proposals were rejected. The industry has yet to receive any substantive feedback or details about what a resolution might include.”

Critics of ending the tax exemption say data centers generate substantial local tax revenue and jobs, and that the exemption is an essential incentive for the industry’s growth in Virginia.

“We’ve got the infrastructure, we’ve got the water, we’ve got the land,” Lucas said. “Where are (data centers) going? They’re not going anywhere.”

House leadership and Spanberger have been skeptical of the prospect of going back on prior deals.

But Lucas appears prepared to dig in her heels. And after the redistricting referendum passed Tuesday, allowing the General Assembly to redraw congressional maps to favor Democrats in 10 out Virginia’s 11 districts, Democrats in the legislature may be hoping the win will impact budget negotiations. The redistricting effort was strongly endorsed by Lucas, and Spanberger was initially tepid in her support.

Senate Majority Leader Scott Surovell said he didn’t think the power dynamics were necessarily shifting in the wake of the victory.

“I’m hopeful that the governor understands she needs to be more involved in the legislative process, especially given what happened yesterday,” he said. “We passed by quite a number of amendments and enacted a bill into law, which I don’t remember happening in a long time… It’s the first year of her term, and I think she’ll figure out Richmond just like all governors do.”

There are other budgetary matters to sort out as well with Spanberger’s rejection of skill games legislation that would have generated tax revenue.

When the legislature reconvened Wednesday, it voted to effectively reject Spanberger’s amendments on a number of key policy proposals, including legalizing the sale of cannabis, banning assault weapons and allowing public employees to collectively bargain. Previously, the sponsors of the assault weapon legislation had said they supported the amendments. The move hands the bills back to the governor to either sign or veto as originally passed.

The General Assembly also voted to preemptively override a veto, garnering a two-thirds majority in both houses to pass a bill as it was initially written. Spanberger had sent SB342, a bill dealing with conservation easements, back to the legislature with amendments. Getting a veto-proof majority on the legislation without the amendments means it is automatically enacted into law, a rare display of legislative power.

“Among our shared priorities are some significant changes for Virginia,” Spanberger said in a statement. “As Governor — and the person responsible for implementing these changes, I put forth amendments focused on enabling us to do so. I will continue to work with the patrons of the bills that are coming back to my desk to make sure that when these bills become law, we get it right. In the coming weeks, my priority will be to help facilitate getting a budget to my desk.”

The legislature recessed Thursday, but did not technically adjourn.

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