Day one of the General Assembly’s special session to tackle the budget ended Thursday with no sign of an agreement on the biennial spending bill and lawmakers leaving Richmond.
Budget conferees have yet to rectify the more than $1 billion difference between the House of Delegates’ spending plan and the state Senate’s proposal.
But there is hope on the horizon. Sen. Louise Lucas, D-Portsmouth, who chairs the Senate Finance Committee, said Thursday that the House and the Senate are getting closer to an agreement.
Del. Luke Torian, D-Prince William County, who chairs the House Finance Committee, said that the House is awaiting communication from the Senate regarding a sit-down negotiation amongst budget conferees.
“Once they are in position and ready to do so, we’ll get started,” he said. “I have been in contact and communication with President Lucas, she and I have been talking and I anticipate that perhaps we’ll agree to come together pretty soon.”
Lucas has been a strong proponent of an effort to end tax exemptions early for data centers — the main catching point in budget negotiations. The tax exemptions are currently slated to expire in 2035, and the Senate budget proposal would end them in 2027. That clause is absent from the House budget proposal.
In Virginia, data centers that meet certain requirements, including investing at least $150 million and creating at least 50 jobs — or, in economically distressed localities, $70 million and 10 jobs — are exempt from paying state retail sales and use tax on computers and other equipment.
Supporters of the effort to end the tax exemptions early have said the tax revenue generated could pay for child care programs, school construction and cover funding cuts to federal programs.
Opponents of the effort to end the tax exemption program in 2027 have said that Virginia would no longer be a competitive state to attract more developers in the billion-dollar industry, an argument that Lucas dismissed Wednesday.
“If there’s going to be any modification to the sales and use tax exemption, that’s a conversation we simply need to have. But existing [memorandums of understanding] that have been signed, it is my belief that we should honor those,” Torian said. He added that he feels confident that a budget agreement will be reached by the 11:59 p.m. June 30 deadline.
The data center tax exemption was implemented in 2008 and saved the industry nearly $2 billion in fiscal year 2025. That amount is significantly greater than projections in fiscal year 2009, when the state Department of Taxation said it would cost $1.54 million, or about $2.37 million accounting for inflation, according to a report by Virginia Public Media.
Josh Levi, president of the Data Center Coalition, said that the industry offered legislative leaders two proposals, the latest of which would provide $1.1 billion of new state revenue over the biennium and hundreds of millions in recurring revenue in the out years.
“These proposals were rejected. The industry has yet to receive any substantive feedback or details about what a resolution might include,” Levi said.
Data centers invested $80.56 billion in Virginia and generated $5.34 billion in state and local taxes during the 2024-2025 biennium, according to the state Department of Taxation.
Budget conferees are also waiting to see what Gov. Abigail Spanberger’s final action will be on legislation that would affect revenues.
The cannabis retail framework bill, which includes a 6% to 9.5% tax, received amendments from the governor. Those amendments were rejected by the General Assembly during its reconvened session on Wednesday, and the bill was sent back to the governor in its enrolled form. Spanberger will have 30 days to sign, veto, or do nothing with the legislation — in which case it would become law absent action from her.
House of Delegates Minority Leader Terry Kilgore, R-Scott County, said that he has heard from school boards and counties that are also at a standstill in their budget process as they wait to hear from the state.
“They’ve got budgetary constraints of June 30 also, so it’s a big issue for our localities and for our constituents in general, teachers, state employees, corrections officers just all across the board,” he said.
The cost of the special session per day in the House is $23,700 if all 100 delegates are present. That breaks down to a paycheck of $237 per delegate per day. Delegates can also receive one round-trip mileage reimbursement per week for regular, reconvened and special sessions, for a total weekly cost of $14,307.15, according to House Clerk Paul Nardo’s office.
The per-day cost of the special session in the state Senate is $12,482.26 per day, said Senate Clerk Susan Schaar.
The cost is not typically budgeted in advance, but there is a contingency account used to fund a special session, Schaar said.
