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Virginia has enacted a $207 billion, two-year budget that creates a statewide electricity-consumption tax on data centers and directs money toward transit, schools, utility-bill relief and other priorities affecting Northern Virginia.
The General Assembly finalized the package June 29 by accepting all 14 amendments proposed by Gov. Abigail Spanberger. That action allowed the budget to become law without another executive signature. It took effect July 1.
“Today, by finalizing our budget, Virginia is charting a path toward a stronger, more secure, and more affordable future for every family who calls our Commonwealth home,” Spanberger said.
One of the budget’s most consequential provisions for Northern Virginia is a tax of 1.1 cents per kilowatt-hour on electricity consumed by data centers. The state’s existing incentives for the industry remain in place. The new tax is projected to generate as much as $600 million annually, or $1.2 billion during the budget period.
“This institutes a statewide energy consumption tax on data centers to ensure this industry pays its fair share and does not drive up costs for Virginia families,” Spanberger said.
The package also addresses some infrastructure and environmental concerns associated with the industry. Under the supplied description of House Bill 1393, data centers drawing at least 25 megawatts must cover utility-infrastructure costs related to their grid expansion instead of shifting those costs to residential customers.
The Department of Environmental Quality is also directed to establish acoustic baselines and standardized monitoring of noise from data-center cooling systems. Separate provisions call for groundwater protections and a process for identifying areas where cooling water is scarce. The precise cooling requirements will depend on the enacted legislation and subsequent regulatory work.
Some revenue from the data-center tax is described as supporting transit needs in Arlington and Alexandria while helping address shortfalls affecting Fairfax County Public Schools and the Washington Metropolitan Area Transit Authority. The exact distribution among those recipients was not itemized in the supplied material.
The budget provides $153 million for Virginia’s share of WMATA’s regional operating subsidy. Its funding framework combines state appropriations, existing regional transportation allocations and temporary waivers of the system’s statutory 3% cap on operating growth.
Another measure, Senate Bill 66, allows localities to ask voters to approve a 1% retail sales tax dedicated to school construction and modernization. The budget also provides 4% raises for public-school teachers. The supplied accounts differ in specificity: one reports a 4% raise without identifying its timing, while another says teachers will receive 4% in each year of the biennium.
For electricity customers, the package allocates 45% of proceeds from the Regional Greenhouse Gas Initiative to credits or reductions on residential and small-business bills. Sen. Saddam Salim’s account says the remaining 55% will continue to support flood mitigation and energy-efficiency programs.
Other statewide provisions include a $2 million annual grant program for cancer screenings for Virginia firefighters and an increase in the standard deduction from $8,750 to $9,200.
The budget also includes a particularly local appropriation: $1 million to establish a visitor center along the Washington & Old Dominion Trail in Vienna. Salim said he advanced the proposal with NOVA Parks and the Town of Vienna Economic Development Department after it appeared in the Senate budget proposal but not the House version.
“I look forward to sharing more news about the Town of Vienna’s plans for this facility in the near future,” Salim said.
A final site, construction schedule and operating plan for the visitor center were not included in the supplied material.