Virginia’s House and Senate released their respective versions of the next budget Sunday afternoon. The new spending plans don’t raise taxes… unless you’re a data center or you want to buy a gun.
“I can’t tell you how much I appreciate that there are no tax increases in this budget,” said Caroline County Republican Senator Richard Stuart at Sunday’s budget release. He was praising Senate President Louise Lucas for not including tax increases in her chamber’s version of the budget, though that’s not entirely true.
Virginia was one of the first states to entice data center growth by having no sales tax on equipment within the facilities, but that may change if Lucas gets her way.
“We’re asking data centers to pay their fair share in sales tax to help deliver our core services: education, transportation and social services,” Lucas said.
Ending the sale tax, according to Senate money staff, will raise over $1 billion in the next two years. Much of that would be reserved for transportation funding in Northern Virginia. There’s also a Senate effort to increase taxes on guns and ammo; if approved, it could see an additional $100 million added to the state's coffers.
Over in the House, there’s no tax increases, but they’re looking at raising about $270 million from skill games and digital gambling, called iGaming — though those funds wouldn’t be collected until 2027 when the proposed legalization would go into effect.
It’s the first confirmation of skill and iGaming legalization after hints from the Spanberger administration that new gambling shouldn’t be legalized until a new state gaming commission is stood up. Legislation to accomplish that task is still flowing through the lawmaking process.
Both chambers put hundreds of millions aside in the face of “uncertainty” coming out of the Trump administration.
“Virginians should not be collateral damage of decisions made in Washington,” House Appropriations chair and Prince William Democratic Delegate Luke Torian said.
Both budgets include money for state employee and teacher raises. They also have the first legislator pay raise since 1988, bumping lawmaker salaries from $17,000 to $45,000 a year. It’ll cost taxpayers $2 million a year.
Senator Stuart and fellow-Republican Buchanan Senator Todd Pillion abstained from the vote on that measure, though Stuard did vote for the final budget bill.
Roanoke Senator Mark Obenshain, Orange County Senator Bryce Reeves and Hanover Senator Ryan McDougle, all Republicans, abstained from the final vote.
“This has been a challenging process, and I appreciate we can have candid conversations we were able to have,” McDougle said to Lucas before explaining his vote. “This budget has a significant amount of proposed revenues above the proposed budget, and I think we need to have a serious conversation about where those revenues come from and how they impact Virginians.”
Both chambers have increases in the standard deduction, but neither align state tax code with many of the changes made by President Trump’s 'One Big Beautiful Bill.' No tax on tips or overtime, costs included in former Governor Glenn Youngkin’s outgoing budget, albeit in a delayed posture, were not included,
Neither chamber — nor Youngkin — included a retroactive rebate for corporate research that could have cost the Commonwealth about $800 million over the next three years.
The Senate budget also includes a $100 rebate to all Virginia taxpayers, $200 per married couple, that would be paid out in October.
As for the often-forbidden-but-still-done "legislating in the budget," the biggest use of that involved approval of mid-decade redistricting maps. It allowed Governor Abigail Spanberger to sign bills for election funding and the maps themselves to kick in upon signature, not in July 1st. Spanberger signed the new maps into law late Friday. Pending a decision from the Supreme Court of Virginia, Virginians will likely vote on approving the new maps in the spring.
Other details buried in the two chambers' budget proposals are still being divined, and the two documents will have to conform by March 14th when the legislative session ends.
