The Public Policy Committee follows a variety of topics from local, state and federal governments. Here is one of the items of note we're following:
Virginia General Assembly Finally Sends State Budget to Governor Spanberger
After more than three months of negotiations and a prolonged special session, the Virginia General Assembly has approved a compromise $207 billion biennial budget, ending a stalemate that had threatened a partial state government shutdown before the July 1 start of the new fiscal year.
The primary obstacle throughout negotiations was how to tax Virginia's rapidly growing data center industry. The Senate had pushed to eliminate or significantly scale back the industry's long-standing sales and use tax exemption, while the House and Governor Abigail Spanberger favored a more measured approach that preserved Virginia's competitiveness.
The final compromise leaves the existing sales tax exemption in place but creates a new electricity consumption tax on data centers. The tax is expected to generate up to $600 million annually, or roughly $1.2 billion over the next two fiscal years, with revenue flowing to the state's General Fund. Revenue collected above the annual cap will be returned to data center operators.
What Happens Next?
The budget has now been transmitted to Governor Abigail Spanberger, who has several constitutional options:
- Sign the budget, allowing it to become law.
- Issue line-item vetoes, removing specific appropriations while approving the remainder of the budget.
- Recommend amendments to individual budget items and return the bill to the General Assembly for consideration.
- Take no action, in which case the budget becomes law after the constitutional review period if the General Assembly is not in session.
Because Virginia's new fiscal year begins July 1, the Governor has seven days to act on the budget after it is presented to her. Legislative leaders approved the compromise with approximately one week remaining before the deadline specifically to give the Governor sufficient time for review.
If Governor Spanberger proposes amendments or exercises her line-item veto authority, the General Assembly may reconvene to consider those actions. Lawmakers can accept or reject recommended amendments, and vetoes may only be overridden by the constitutionally required supermajority vote.