As Virginia nears a June 30 deadline to pass a budget before it runs out of funding, friction between Gov. Abigail Spanberger and the Democratic State Senate is growing.
Spanberger spoke to News 3 anchor Kurt Williams Monday morning about the frayed state of budget talks between herself and lawmakers, which has been ongoing for months — the future of data centers are a key issue in these negotiations. The House of Delegates unveiled their latest budget proposal on Friday with less than a week remaining before lawmakers return to Richmond to finalize a deal.
In an interview with News 3, Spanberger commended the current House proposal.
"What the House has put forward is a proposed conference report. Notably, it has bipartisan support within the House Appropriations Committee," Spanberger said.
But Senate leadership said they were "disappointed" and called the move "unprecedented," bringing us back to the biggest issue stalling budget talks: the data center sales and use tax exemption.
Watch related coverage: Virginia senators rally to end data center tax exemption ahead of June 30 budget deadline
The exemption is set to expire in 2035, but the Senate wanted to eliminate it next year, saying it costs the state nearly $2 billion in revenue each year, well beyond what was expected when it was extended in 2016.
House leadership and Spanberger have said data centers need to pay their fair share, but that eliminating the exemption early would hurt Virginia's business reputation. The new budget proposal creates a commission to examine all impacts of the industry and make recommendations by November.
Late Friday afternoon, the lead Senate budget negotiator, Senator Louise Lucas (D-Portsmouth), released a statement on social media that said, in part: "The House and Governor insist on studying the impact of data centers when the issue has already been studied by the legislature. Virginians are dealing with the negative consequences of data centers today. They expect action now rather than waiting another year and want us to protect their interests rather than those of wealthy corporations."
Watch related coverage: Virginia Beach City Council unanimously rejects future data centers, residents applaud the decision
Spanberger responded to the grievances brought up by Virginia state senators, saying they haven't outlined a clear plan in regards to data centers as the deadline to pass a new budget get's uncomfortably close.
"And unfortunately, what we're seeing on the Senate side is there is no written proposal. There is no explanation of how it is that they intend to arrive at whatever or what it is they're proposing relative to data centers. Now, certainly there's been a press release, but no numbers, no no proposals, no policies to actually pursue or negotiate," Spanberger told News 3.
In her post on social media, Lucas did detail the Senate proposal's aim to establish "a tiered state impact fee on data centers. The fee would be applied on a data center's permitted generator type and energy capacity–generating $1.7 billion in revenue."
Lucas said the funding could be used for rebates for taxpayers, a 4% increase for teachers in each year of the budget, and improving access to child care.
Watch related coverage: Virginia weighs how to use RGGI funds as Dominion projects $13 monthly cost
Lucas later took to social media to push back against Spanberger's previous comments in regards to a Senate proposal for the state budget, writing: "We worked with the House and the Governor to come up with multiple compromises. We answered her questions and she continued to move the goal post every time. Any notion that she didn't know what our proposal was is just complete [expletive.]"
On the topic of data centers, Lucas held a rally with State Senator Mamie Locke on the steps of Hampton City Hall on Sunday. The senators joined to call for an end to the data center sales and use tax exemption.
"We are not opposed to technology. We know we all need technology. The problem is, how much will the voters of the Commonwealth — how much are they willing to pay for it?" Lucas said.
During her interview with News 3 on Monday, Spanberger encouraged state senators to engage in conversations with the House, even suggesting they put their proposal online.
During the rally on Sunday, News 3 asked Locke whether a state government shutdown was on the table.
"We are not anywhere near talking about a government shutdown. We don't do that here in the commonwealth of Virginia," Locke responded.
Other aspects of the House's budget proposal includes increased investment in education and social services. Some of the budget items were touted by state lawmakers as safeguards against actions being taken at the federal level.
"Three-percent raises for teachers in both years, and expanded access to school construction grants, special education services and school breakfasts," lead House negotiator Del. Luke Torian (D-Prince William) said. "This proposal also includes an additional $3.1 billion for Health and Human Services, fully funding Medicaid and CHIP forecast, and new SNAP costs due to HR1. It also provides premium access for Virginians losing their federal health care subsidies."
Watch related coverage: Gov. Spanberger vows to work toward legalization of Virginia retail marijuana marketplace after vetoing bill
House lawmakers say they have also reached a deal with Spanberger to create a recreational retail marijuana market through the budget, after she vetoed earlier legislation.
"It's just a matter of finishing the legal edits," said Del. Paul Krizek (D-Fairfax), one of the patrons of the legislation. "The whole compromise should be ready by Tuesday morning."
The House of Delegates are set to return to Richmond on June 18 to vote on a budget. House Speaker Don Scott told reporters if a deal is not reached with the Senate by that time, they would move forward with the House proposal.
The Senate is scheduled to return to vote on a budget on June 22.
Click here to see how we use AI at WTKR News 3.
