Louise Lucas

Virginia lawmakers are divided over whether to continue a sales tax exemption for data centers as the fiscal 2027 budget deadline approaches. The Senate voted to end the tax break, which the House rejected, with Gov. Abigail Spanberger advocating for data centers to pay their 'fair share' while facing potential government shutdown risks.

Virginia’s revenue forecast increased by $1.5 billion over three fiscal years, providing lawmakers more flexibility as budget negotiations remain stalled over disagreements on data center tax incentives and spending priorities. The updated projections show higher-than-expected General Fund revenues for 2026–2028, with lawmakers set to reconvene in June to finalize a budget before the June 30 fiscal deadline.

Virginia lawmakers are returning to Richmond for another budget negotiation session as the June 30 deadline nears, with a government shutdown risk if no agreement is reached. The primary dispute centers on a Senate proposal to phase out a data center tax exemption, opposed by Governor Abigail Spanberger and House Democrats who argue it could harm business investment.

Virginia's state revenues have exceeded forecasts by over $850 million despite losing 41,900 jobs since the start of fiscal year 2026. A budget standoff between the Democratic-controlled Senate and House of Delegates centers on a dispute over rolling back a sales and use tax exemption for data centers.