Virginia's bold budget plan targets data centers for $1.7B in new revenue

Virginia Senate leaders have unveiled a new budget proposal aimed at raising significant revenue over the next two years. The plan introduces a fee on data center generators to fund key public services and tax relief. It comes as the state’s general fund revenues currently exceed forecasts by hundreds of millions of dollars. The proposal would generate an estimated $1.7 billion over two years. A new fee on data center generators is expected to bring in about $582 million in fiscal year 2027 and roughly $1.16 billion in fiscal year 2028. This approach replaces an earlier idea to remove the industry’s sales and use tax exemption.

Virginia’s updated revenue forecast adds $585.5 million for fiscal year 2026 and projects an additional $922.6 million for the 2026-28 period. Despite economic uncertainty, general fund revenues are already running about $837 million ahead of predictions.

The budget includes a one-time tax rebate of $100 for individual filers and $200 for joint filers. It also increases the standard deduction and allocates funds for pay raises for teachers and state employees. Additional support is earmarked for K-12 education, healthcare, childcare, housing, and environmental programmes.

Several senators have stated they believe a budget agreement will be reached before the June 30 deadline. Lawmakers must approve the budget before the end of Virginia’s fiscal year. The proposed fee on data center generators would fund a range of public services and tax benefits. Lawmakers are working to finalise the budget before the June 30 cutoff. The plan aims to balance revenue growth with investments in education, infrastructure, and financial relief for residents.