When I decided to run for office, I expected to be asked hard questions about the issues. I prepared myself for conversations about universal healthcare, the minimum wage and climate change, and I gave speeches and wrote op-eds about those topics and more. When I became a state senator, I never expected that our biggest problem would actually be the massive buildings dotting our region that look like ordinary warehouses: data centers.
The more Virginians learn about this industry, the more concerned they are, and for good reason. Data centers have popped up in enough states to become a national issue, but Virginia remains the data center capital of the world, and not by accident. The General Assembly used tax breaks to attract them to Virginia and incentivize them to invest here — tax breaks that were never meant to be permanent. Now, with this industry benefiting from the global AI boom while household energy costs rise, the General Assembly needs to act again. We need to end Virginia’s data center tax break.
At a time when most Virginians want to speed up our clean energy transition, data centers are pushing us toward a future with more pollution and higher climate risks. Modern data centers for artificial intelligence consume substantially more electricity than the first wave of Virginia’s data centers. Energy demand will double in the next ten years due largely to data centers, according to JLARC, and the Piedmont Environmental Council projects that nearly all electricity demand growth through 2045 will come from data centers, potentially requiring more fossil fuel generation than state law currently allows. During January’s extreme cold period, the regional grid operator PJM warned that the demand spike from homes with electric heat could potentially cause brownouts. This is not a failure to maintain the grid; it is a grid stretched to the limit by an industry demanding more power than the grid can supply.
Localities have their own tax incentives, and those localities that are still trying to attract more data centers will be able to continue those incentives. Too many data centers are being approved next to parks, homes, schools, medical facilities, and nursing homes, forcing neighbors to live with nonstop noise, fleets of diesel generators and other industrial impacts that do not belong in residential communities. Residents of Sterling recently learned the constant noise they had been complaining about was from a data center operating natural gas turbines on-site to power a 450 megawatt facility, creating real public health costs that the surrounding neighborhood never consented to.
Stories like this are why a Washington Post-Schar School poll found 59% of voters say they would be uncomfortable with a new data center in their community, compared to just 24% in 2023. The voters are telling us what I quickly realized after being elected: we need to do something about the data centers.
Nationally, we need federal planning and siting standards that guide where large data centers can be built and require agencies to track their cumulative impacts on our energy grid, climate goals, land and communities. Federal permits, tax incentives and financing should be tied to strong regional and statewide planning, so no community is left to face these impacts alone. That includes stronger environmental justice protections, health and noise standards, and funding for community benefits so the people living next to these facilities see real benefits, not just costs.
We also need federal rules and guidance that require local decision-makers to consider regional pollution, grid reliability and land use impacts before approving major data center projects. Federal agencies can provide better data, technical assistance and funding so local governments are not outmatched by corporate lobbyists in the zoning and permitting process.
Some of this work will take years, but we should act now to end the sweetheart tax breaks that are shifting the true cost of data center growth onto families and small businesses. The Virginia Senate’s budget proposal would do just that. In 2024 alone, the sales and use tax exemption for data centers reduced Virginia’s revenue by $1.02 billion — money that should be going to schools, transit and housing instead of corporate giveaways.
As Virginia looks for ways to balance our state budget, we must ensure that we are also helping families and small businesses balance theirs. Ending the temporary data center tax breaks now is the only solution that has been put forth to keep Virginia on a stable financial path for years to come. When the General Assembly convenes this week, I hope that we can agree to make the fiscally responsible choice and agree to the Senate budget.
Salim is a state senator from Fairfax. He is a Democrat.
