As members of the Virginia General Assembly approach the conclusion of their legislative session, one of the most important decisions remains unresolved.
More than a billion dollars are at stake in one of the most consequential decisions that members of the General Assembly will make this year. Do data centers need a tax break? Senator Russet Perry is a Democrat from Loudoun County, which has the highest concentration of data centers in the world.
"This industry is not a struggling industry. It is not a fragile industry. The sales and use tax exemption that was created for data centers was originally created to attract this industry, and it worked. The growth has been extraordinary," Perry says. "But what began as an incentive has turned into an automatic, billion dollar subsidy."
But many lawmakers from rural Virginia say the tax break is needed to attract data centers to their part of the Commonwealth.
"If they don't want to give tax credits to data centers in Northern Virginia and areas where they don't want anymore, that's fine," says Senator Tammy Mulchi, a Republican from Mecklenburg County. "But in our rural areas, we very much need the revenue from data centers. If our localities want them, then we should be able to offer these incentives. It's vital."
The Senate spiked the tax exemption from its budget, allowing it to fund tax rebates and child care programs and raises for teachers. The House version of the budget retains the tax exemption for data centers. Leaders from the money committees are expected to strike a deal at the conclusion of the legislative session next week.
