by Dick Hall-Sizemore

Due to economic development announcements and actions by Governor Spanberger, the job of the General Assembly negotiators on the biennial budget just got harder.

The Governor has vetoed two pieces of legislation which would have produced revenue that each house had built into its budget.  =For the Senate, it was SB 542 (Aird-D, Petersburg), which would have established a framework for the legal sale of cannabis. = The proposed Senate budget includes $71.1 million for the biennium in projected revenues from the passage of that bill. 

The budget proposals of both houses included projected revenue from the legalization and regulation of “skill games.”  =The House was counting on the enactment of HB 1272 (Hayes-D, Chesapeake) and included $265.3 million in projected additional general revenue from this bill in its budget. Unfortunately for the House budget, the bill got caught up in a dispute between the House and the Senate and a compromise bill agreed to by conferees was narrowly defeated by the House. The Senate took a different approach with another bill (SB 661, Rouse-D, Virginia Beach). The legislation specified that revenue from licensing of skill games be treated as non-general fund revenue and be deposited into a special fund for education. The Senate budget bill projected that $80 million from those revenues would be distributed to local school districts in the second year of the biennium. The Governor vetoed this bill.

While the loss of this anticipated revenue would present a problem for the budget conferees, especially those from the House, it could have been worked out. However, the major problem facing the conferees can’t be solved easily. This is the issue of the Senate proposal to repeal the sales tax exemption for data centers, thereby freeing up $1.8 billion for the biennial budget. The House budget conferees and the Governor are opposed to the proposal, but, so far, the chair of the Senate Finance and Appropriations Committee, Sen. Louise Lucas (Portsmouth) (yes, that Louise Lucas!) shows no sign of budging.

A recent announcement will undoubtedly put more pressure on the Senate. Earlier this week, officials from Pittsylvania County and the City of Danville announced an agreement with a Colorado firm to build a large “digital campus” on the Southern Virginia Megasite at Berry Hill. The agreement calls for a minimum investment of $100 billion over 30 years and the creation of 2,500 jobs over 20 years.  According to the Virginia Economic Development Partnership, the project represents the largest private investment ever announced in Virginia and one of the top five industrial announcements ever made in the U.S. According to one local official, the agreement would be “transformational” for that area.

There is one obstacle: The deal is contingent upon Virginia retaining the sales tax exemption for data centers.

So, the question comes down to whether Louise Lucas will stand in the way of a project that will be of enormous benefit to one of the poorer parts of the Commonwealth that has been hit hard by the demise of its textile mills and tobacco warehouses, as well as a benefit to the Commonwealth as a whole. And, if she remains implacable, will her fellow Democrats on the Finance Committee still support her or will they choose to enable Southside Virginia to reap the economic benefits of the growing technology sector?

My sources for this article:

Richmond Times-Dispatch–https://richmond.com/news/state-regional/business/article_2e366544-f0ff-592a-a43e-1b467aa4253b.html

Cardinal News–https://cardinalnews.org/2026/05/19/a-data-center-project-in-pittsylvania-was-approved-monday-with-higher-investment-and-jobs-than-previously-announced/