Virginia budget negotiations stall, again. But a backup plan emerges

Kate Seltzer, The Virginian-Pilot on Jun 5, 2026

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RICHMOND, Va. — Democrats in the General Assembly don’t appear to be any closer to reaching a budget deal. Money committee chairs Sen. Louise Lucas and Delegate Luke Torian met with Gov. Abigail Spanberger on Friday morning. But the conversation didn’t go well.

“Today, the Governor and House decided that they did not want to alter the freeloading policy for data centers,” Lucas said in a statement Friday afternoon. “They decided that this was far more important than having data centers pay their fair share to provide services to the people of the Commonwealth for the next two years.”

The Senate budget proposal would end the sales and use tax from which data centers currently benefit, which could generate $1.6 billion annually by some estimates. Without intervention, the sales and use tax exemption wouldn’t end until 2035. But Spanberger and the House have been hesitant to end existing business agreements.

Separately, all of the budget conferees from the House and the Senate were supposed to meet to begin hammering out the differences in the existing budget proposals. But that conference didn’t happen. Two sources briefed on the discussions confirmed that Lucas walked out of the initial meeting. And the conferees went home no closer to reaching an agreement.

With a June 30 deadline, when state funding runs out, rapidly approaching, one option the legislature is considering is a “skinny budget” that would fund core government services and legislation signed by Spanberger that is required by law to be funded. The General Assembly could resume talks after that, but if lawmakers don’t, any individual member budget amendments not tied to legislation could be dead until the legislature comes back in January.

Torian said Friday’s conversation was “meaningful” but declined to comment further on the status of the negotiations. On social media Friday afternoon, Lucas lashed out at the governor and House leadership, calling Spanberger “Data Center Diva” and House Speaker Don Scott “Amazon Don.” A spokesperson for Spanberger’s administration declined to comment, and Scott did not respond to a request for comment.

“I know the Governor and House’s narrative will be that I wasn’t willing to compromise or to meet,” Lucas said. “This is simply not true. We attempted to move forward multiple times. With the support of the Senate conferees, I have offered multiple compromise options that would have provided revenue from data centers. Under these compromises, neither side got everything.”

Lucas did not respond to a question about what those compromises looked like. Spanberger previously floated the idea of a consumption tax on the electricity data centers use. The data center industry had proposed paying $1.1 billion over the biennium, but in April, Lucas said that wasn’t good enough.

A new state revenue forecast out this week projected an additional $1.5 billion in revenue over the biennium compared to previous forecasts. In her statement, Lucas said that Virginia must have a balanced budget, and that her priorities also included responsible data center development in addition to revenue generated.

A Washington Post-Schar School poll conducted in March found that just 35% of Virginia voters would be comfortable with construction of a new data center in their community. That’s down from 69% of voters who were asked the same question in 2023. Likewise, three years ago, 61% of voters supported providing tax breaks to companies that build data centers in Virginia. In March, that number had fallen to 37%, the poll found.

In Hampton Roads, local governments have held their own discussions about data centers — with some advocating for adopting new restrictions on where they can operate or banning them outright.