Sunday was budget day in Richmond, the day where the budget-writing committees in each chamber release their proposed rewrites of the spending plan that Gov. Glenn Youngkin proposed shortly before he left office.
Virginia’s budget cycle is quirky like that.
What happens next is that, after some procedural actions, a select group of legislators — the “budget conferees” — will work out the differences, then send the budget to our new governor, who has line-item veto authority.
For a more complete account of the budget proposals, see the story by Cardinal’s Richmond-based reporter, Elizabeth Beyer. In the meantime, here are 10 quick things to know through the lens of Southwest and Southside:
1. The move to end data center tax breaks comes just as data centers are eyeing rural Virginia
The Senate budget calls for ending the state’s tax break for data centers. (A bill the House of Delegates recently passed would modify it.) Sen. Mamie Locke, D-Newport News and the Senate Democratic Caucus chair, sent out this statement: “The original data center tax break was designed to help struggling communities attract jobs, and it cost $1.54 million a year. What it became — a $1.6 billion annual subsidy flowing overwhelmingly to the most affluent part of our state and to some of the wealthiest corporations in the world — was never the intent. We are recapturing that runaway giveaway.”
She’s right: The tax break was originally intended just for economically distressed communities, with Mecklenburg County specifically in mind. Mecklenburg scored a Microsoft data center, but the torrent of data center growth since then has gone to Northern Virginia.
The question: Will ending this tax break send data centers to other states, just as some rural localities are starting to score data centers? Will this provision, if adopted, have the effect of shutting off a potential revenue generator for rural Virginia? Instead of ending the tax break entirely, should it be returned to its original intent? Not every rural locality may want data centers but for those that do, is this a case of the rest of Virginia saying, “We’ve got ours, but you can’t have yours”?
2. There were some big requests that got turned down
There are always more requests than can get funded, but it’s still worth noting what legislators asked for that didn’t make the cut: No money for renovation of the Roanoke-Blacksburg Regional Airport terminal. No money for extending the runway. No money for the Bristol landfill. No money for a study of downtown Roanoke’s needs in light of proposals for a casino and the impending move of the science museum out of Center in the Square. No money for a branch of the Martinsville-based Virginia Museum of Natural History in Waynesboro.
The Roanoke-Blacksburg airport’s needs will not go away. Neither will the stench at the Bristol landfill. These localities will just have to find other ways to pay for them, it seems.
Lots of small things got turned down, too: no money for a state mycologist to track Virginia’s fungi.
3. There’s a big House-Senate gap on investment in Virginia Tech’s medical programs in Roanoke
The House budget has $13 million to support enrollment growth at the Virginia Tech Carilion School of Medicine and $6 million to start a Patient Research Center at the Fralin Biomedical Research Institute. That’s only part of what legislators had asked for, but $19 million remains a significant investment. The Senate version, though, doesn’t appear to have similar funding, so this will be one of many things the budget conferees will need to work out.
4. There’s a big House-Senate gap on the proposed inland port in Washington County
Youngkin had proposed $35 million for the freight cargo hub. The Senate left that intact. The House cut that to $2 million in planning money. This will be one to watch because during last year’s campaign, Spanberger endorsed the port. It’s also a key priority of state Sen. Todd Pillion, R-Washington County, who historically has been one of the final budget negotiators.
5. The New College Institute might get a new name and a new direction
Youngkin had twice tried to zero out funding for the education center in Martinsville. The House version of the budget restores that funding (the Senate doesn’t). It would also move two programs out of the Virginia Community College System and put them under the New College Institute: the A.L. Philpott Manufacturing Extension Partnership and GenEdge, which provides consulting services to manufacturing companies. Finally, the House would redesignate NCI as the West Piedmont Higher Education Center, presumably putting it on a footing with other higher ed centers around the state.
6. A new school funding formula?
The Senate sets aside $1.25 million to study a new school funding formula. That’s a big deal because inevitably somebody will get more money and somebody will probably get less.
7. Pay attention to the fine print, part 1: Interstate 81
We think of budgets dealing with money but sometimes there are simply “language amendments” that don’t involve spending. One key language amendment comes out of the House. It directs the secretary of transportation “to study and evaluate options for accelerating large-scale improvements to the Interstate 81 corridor,” including public-private partnerships on condition that “there shall be two toll-free lanes in each direction available for continued use on Interstate 81.” What will that lead to? If this is adopted, we’ll find out Dec. 15, 2026, because that’s when the report would be due. In the early 2000s there was a previous attempt at a public-private partnership for I-81 that would have made it a toll road. That plan fell apart and I-81 remains a mess.
8. Pay attention to the fine print, part 2: George Mason University and Averett University
Del. David Reid, D-Loudoun County, pushed for the language in the House budget that authorizes George Mason University, a public school in Fairfax County, to enter into a partnership with Averett University, a struggling private school in Danville, to work together on economic development issues in Southside. If this goes through, this would make George Mason a key player in a rural part of Virginia. It’s hard to know where that would lead, but Reid is thinking far ahead here.
9. Senate would lift the cap on college tuition
Both parties say college tuition is too high, but over the years Democrats have been reluctant to impose tuition caps. You’d think they’d be part of an “affordability” agenda, but apparently not.
10. Gun taxes would bring in more money than weed taxes
The legislature is in the process of legalizing retail sales of cannabis. The Senate version anticipates that Virginia will collect $21.3 million in weed taxes the first year, $49.8 million the second for a total of $71.1 million over a two-year budget.
Interestingly, the Senate anticipates more revenue from a proposed 11% tax on sales of guns and firearms: $28.9 million the first year, $69.4 million the second year for a total of $98.3 million. That depends, though, on that tax being enacted. The Senate approved it 21-19 but the House continued its version until next year. If that Senate bill meets the same fate in the House, that’s $98.3 million that would have to be taken out of the budget.
These are just the highlights. We’ll find out more as we dig deeper.
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