[Richmond Times Dispatch] Virginia Budget Deal Emerges with Energy Consumption Tax on Data Centers

Virginia lawmakers have reached a deal on the Commonwealth’s biennial budget before the July 1st deadline. The compromise budget includes an increased energy consumption tax on data centers in the state. Data centers were one of the main points of contention between the Governor, House of Delegates and State Senate, as they comprise a significant portion of Virginia’s economy but are criticized and opposed over energy and water consumption concerns. The new energy consumption tax increase is projected to raise $1.2 billion, which will be used to help fund public education, healthcare, public safety, and transportation in the Commonwealth.

The new energy consumption tax rate for data centers will be $0.011/kilowatt hour, which is a significant increase from the old rate of $0.000875/kilowatt hour. For context, the tax rate for residents is $0.001595/kilowatt hour. That residential rate would result in a $1.60 tax on a $172 monthly bill for 1,000 kilowatt hours.

Senate Finance Chair Sen. Louise Lucas (D-Portsmouth) originally wanted to end the 16-year-old sales tax exemption for qualifying data centers entirely. However, Governor Spanberger and House Appropriations Chair Del. Luke Torian (D-Prince William) were against that proposal, instead wanting to impose stricter environmental regulations on data centers along with a higher energy consumption tax. Both Sen. Lucas and Del. Torian have released a joint statement, saying the ultimate “budget agreement reflects our shared commitment to making Virginia more affordable for families.”

You can read the full article here for more details.