General Assembly to consider comprehensive study on data centers
As the June 30 budget deadline nears, the Virginia House of Delegates, Senate, and Gov. Abigail Spanberger are still unable to agree on tax breaks for data centers.
The House Appropriations Committee announced a budget conference proposal on June 12 that doesn’t require data centers to meet environmental standards to be exempted from the state’s 5.3 percent sales and use tax. That issue has been a matter of contention, stalling budget negotiations for weeks.
Instead, it calls for the establishment of a commission to develop a comprehensive study on data centers. The final report is due by Nov. 1.
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The sales tax exemption helps data centers save about $1.6 billion a year, mostly on expenses for replacing and upgrading computer equipment.
According to the Virginia Mercury, House Speaker Don Scott (D-Portsmouth) has supported the tax breaks because of the local tax revenue data centers generate and the union jobs that come with their construction. He urges the Senate to support the budget compromise package.
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The House Appropriations conference proposal includes the following language on the commission’s study on data centers:
- The commission will thoroughly evaluate the direct and indirect costs and benefits of the data center industry, with a report and recommendations for legislation to address the financial, energy, air, water, and noise impacts in time for consideration by the 2027 General Assembly.
- The commission “will ensure energy demands generated by data centers are not borne by residential ratepayers.”
- The commission “will investigate all elements of data center impacts, including community benefits agreements.”
- The commission will “consider the importance of the data center industry to revenue streams for local governments – including those with large industry presence and those interested in attracting future development.”
- The commission will consider future potential strategies for generating additional state revenue from the data center industry.
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