by Dick Hall-Sizemore

Gov. Abigail Spanberger is pushing back against the elimination of a sales tax break for data centers being proposed by Senate Democrats in their budget recommendations. (For background on the sales tax exemption, see Steve Haner’s discussion here.)

There is a tradition in which the governor meets with the budget bill conferees (those members chosen to work out the differences between the House and Senate budget bills) to discuss the differences and the governor’s priorities. Following that is the “Governor’s letter” to the conferees, in which the governor sets out his/her priorities and recommended actions for the budget. Among staff members who worked in the past on helping draft “the letter,” there was great skepticism as to how much attention the conferees paid to it.

However, this year, reports the Richmond Times Dispatch, Spanberger has used the meeting and the letter to send a strong signal that she does not fully support the Senate proposal to repeal the exemption on sales tax for equipment enjoyed by data centers. “I know we share a commitment to protecting Virginia’s fiscal integrity, upholding our commitments to businesses that we have invited to invest in the Commonwealth, and maintaining the AAA bond rating we have held since 1938,” she stated in the letter. The governor’s spokesperson then doubled down, “As budget negotiations advance, the Governor has expressed to House and Senate leaders her serious concerns about going back on commitments Virginia has made to businesses that it recruited to invest in the Commonwealth.” 

The chief proponent of repealing the sales tax exemption, the chair of the Senate Finance Committee, Sen. Louise Lucas (D-Portsmouth) declared that she “would stand my ground” on the sales tax proposal.

How this plays out will be interesting.