HAMPTON, Va. — Two powerful Virginia State Senators are pressing to eliminate a sales and use tax exemption for data centers, arguing the cost to the Commonwealth has grown far beyond what lawmakers anticipated when they approved its extension a decade ago.
State Sens. Mamie Locke and Louise Lucas held a rally Sunday on the steps of Hampton City Hall, calling for an end to the exemption ahead of a June 30 budget deadline.
"They need to pay their fair share so we can continue to pay for education, public safety, Medicaid, all of our core projects," said Lucas (D-Portsmouth).
"We're giving away billions of dollars to these data centers," Lucas said. "We need to stop it right now."
Virginia is estimated to have 35% of the world's data centers, which help manage and process data across the internet, including websites people use daily.
In 2016, lawmakers approved extending the exemption through 2035 to drive investment. The cost has since grown to $2 billion a year — far higher than was expected when the exemption was extended.
"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.
On Friday, the House of Delegates released its proposed budget, which did not include ending the exemption. Instead, the proposal calls for a commission to study the impacts and make future recommendations. Gov. Abigail Spanberger voiced her support for that approach.
"The question is not how did we get here, but how do we fix it and fix it in a non-disruptive way," said House Speaker Don Scott (D-Portsmouth).
The Data Center Coalition is also weighing in, opposing any early end to the exemption.
"Getting rid of this exemption and certainly getting rid of the exception before the sunset is going back on commitments that have been made to the industry and to those that have made investments here in Virginia," said Nicole Riley, the group's director of Virginia government relations.
The coalition says it is open to negotiation.
"We're certainly willing to be at the table to talk about it and try to come to something that reasonably and feasibly can be done," said Riley.
News 3 asked Sen. Locke (D-Hampton) 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.
Lucas is visiting communities across the commonwealth this week to continue making her case.
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