Overview
- House and Senate leaders reached the agreement that would impose a temporary electricity tax of $0.011 per kilowatt-hour on data centers, capped at $600 million in collections per year for two years.
- The deal was presented as a budget solution to end a monthslong intraparty impasse that had forced the legislature to adjourn in March without a budget and risked a government shutdown.
- Lawmakers kept the sector’s longstanding sales-tax exemptions intact, which are valued at nearly $2 billion a year, instead pairing the temporary tax with other budget changes.
- The package directs roughly half of expected Regional Greenhouse Gas Initiative revenues into consumer ratepayer rebates and comes as Virginia prepares to rejoin RGGI in July with utilities planning to pass related costs through to customers.
- The Data Center Coalition warned the tax could deter investment and jobs, and the agreement still requires approval by both chambers of the General Assembly and Democratic Gov. Abigail Spanberger before taking effect.