RICHMOND, Va. — Virginia budget negotiators reached an agreement on a new two-year budget Friday, according to lead Senate negotiator Sen. Louise Lucas (D-Portsmouth).
Lucas posted on X Friday evening that the new spending plan has been posted. The announcement came one day after she told CBS 6 that an agreement in principle had been reached.
The deal was reached less than two weeks before the current budget expires on June 30.
A list of the amendments can be seen here. A summary of the agreement can be seen here.
According to page 5 of the summary, the Conference report includes a consumption fee for data centers that will last for the life of the budget and is expected to generate $600 million each year.
A budget deal had been delayed for months due to disagreements between the House, Senate, and Governor Abigail Spanberger over data centers — specifically a sales and use tax exemption on computer equipment.
The exemption is set to expire in 2035, but Lucas wanted to get rid of it next year and said it cost the state more in lost revenue than was predicted (nearly $2b last fiscal year).
The House and Spanberger wanted to keep the exemption and argued it would harm Virginia’s business reputation but agreed data centers had to pay their fair share.
Spanberger had proposed a consumption tax for data centers in March.
Earlier this week, Lucas unveiled a new proposal that would keep the exemption and tax data centers based on the number of generators they have on site.
Josh Levi, President and CEO of the Data Center Coalition, spoke out Sunday against the compromise.
"Nothing about this hastily assembled scheme will make life more affordable for Virginians or encourage job creation. At a time when Virginia badly needs new jobs and investment, the General Assembly is adding more than a billion dollars in unnecessary new taxes that will raise costs on Virginians and Virginia businesses," he said in a statement. "The General Assembly is breaking its commitments to an industry that has invested hundreds of billions of dollars, pays billions in annual taxes, and supports tens of thousands of jobs, including many blue-collar union workers who face an uncertain future as businesses prioritize new investment in states with competitive and stable business environments."
Along with the new consumption fee, the budget deal also creates a "Joint Subcommittee on Tax Policy” to study the sales and use tax exemption and report recommendations to the General Assembly by December 15, 2026.
Other Highlights
Among the other items included in the conference report:
- An increase in the standard deduction from $8,750 for single filers to $9,200 in taxable year 2027 and $9,300 in taxable year 2028. The increase for joint filers would increase on the same schedule from $17,500 to $18,400 to $18,600.
- It includes the deal reached by lawmakers and Spanberger for the creation of a recreational retail marijuana market, with sales starting July 1, 2027.
- It gives all localities the option to hold a referendum to ask residents if they want to create a new 1% sales tax that would be used to fund school construction (this was something that had been passed by lawmakers in previous years, but vetoed by former Gov. Glenn Youngkin).
- It has a 4% raise for teachers and state employees in each year of the budget.
- It puts $25 million towards a childcare pilot program where the state and employers would contribute to childcare costs for employees. The language said eligible families can make “up to 100% of state median income, with allowance for adjustments in areas with higher costs of living."
- It allocates $10.6 million to support the response and clean-up at the Shoosmith Landfill in Chesterfield County.
- It includes $15 million to support Richmond for the demolition of the Coliseum.
Lucas and House Appropriations Chair Del. Luke Torian (D-Prince William) shared the following joint statement on the agreement:
This budget agreement reflects our shared commitment to making Virginia more affordable for families. At a time when too many households are feeling squeezed by rising costs and economic uncertainty, this conference report makes historic investments to lower costs, strengthen our schools, protect access to healthcare, expand economic opportunity, and maintain the Commonwealth’s strong fiscal foundation.
We appreciate the hard work of the conferees, staff, and our colleagues in both chambers who helped make this agreement possible. We look forward to passing this conference report and sending it to Governor Spanberger’s desk.
Gov. Spanberger, in a statement sent to News 3, said the budget is a "compromise proposal" and said it will protect families from President Trump's policies in his "One Big Beautiful Bill." Read the full statement below.
“Today, the General Assembly has moved forward with a budget proposal — and that means we are keeping our government open and delivering for the 8.8 million people who call our Commonwealth home. “There is a lot to be proud of in this budget. It delivers raises for our teachers and public employees, makes new investments in our schools, includes a RGGI credit for residential customers and small businesses, and takes other tangible steps to make Virginia more affordable — all while protecting families from the devastating cuts in the so-called ‘One Big Beautiful Bill.’ “Importantly, this budget positions the Commonwealth to be a national leader on data centers. For the first time anywhere in America, Virginia will institute a statewide energy consumption tax on data centers — an idea I first proposed this spring — to ensure this industry pays its fair share and does not drive up costs for Virginia families. “This is a compromise proposal — one my administration helped craft — and it builds a strong foundation for further discussions about the future of this industry in Virginia on issues like environmental and community impact. “Failing to pass a budget would have been unprecedented in the history of our Commonwealth — and it was never an option. My focus remains exactly where it has always been: lowering costs for Virginians, delivering for our schools and communities, and supporting the families who count on their government to meet its most basic responsibilities.”
The Senate and House returned to Richmond on June 22, where both chambers agreed to the conference report. The budget now goes to Spanberger's desk for consideration.
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Eat It, Virginia! with Scott and RobeyUntold with Catie Beck
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