Virginia Democrats have agreed to impose a new energy tax on data centers, resolving a monthslong budget impasse that threatened the state’s first government shutdown.
Data centers would face a temporary tax on their power use — costing the industry an estimated $600 million per year — under a budget agreement reached Friday by state House and Senate leaders. The deal maintains the industry’s sales tax exemptions, which are worth nearly $2 billion a year and had been at the center of the intraparty standoff.
The deal would also reroute nearly half the state’s revenues from the Regional Greenhouse Gas Initiative into ratepayer rebates. Virginia is set to rejoin the northeast’s cap-and-trade system in July, and the state’s largest utility plans to pass along about $13 per month onto bills for RGGI costs.
The agreement needs approval from both legislative chambers as well as Democratic Gov. Abigail Spanberger, who did not respond to a request for comment. Spanberger and House Democrats were against the Senate’s initial bid to repeal the sales tax exemption, arguing it would amount to breaking a contract and could hinder Virginia’s business climate.
