Right on schedule, or just in the nick of time? Either way, Virginia’s 2026-27 biennial state budget was approved on June 29th and became effective July 1st. Reaching a budget deal at the end of the legislative session in March is ideal because it allows maximum time for our local governments and businesses who work with the government to plan ahead. Historically, Virginia has been able to get this done, but in my third year we have not yet accomplished it – and 8 of the last 14 budgets have not been completed until after the regular session adjourned.

With the negotiations out of the way, we can finally say with certainty what is in this budget – and there is much to be excited about. Governor Spanberger and my Senate colleagues disagreed about the need to address the growing fiscal impact of the data center sales tax exemption, which cost $1.02 billion in 2024 alone. While the Senate’s initial demand of a full repeal of the exemption was not achieved, the compromise we struck to create a new Data Center Electricity Consumption Tax will raise $1.2 billion over two years. Both the sales tax exemption and the new consumption tax will incentivize data centers to invest in reducing their energy use, and businesses who chose to locate in Virginia for the sales tax exemption are on notice that rates may change further in the future. There will also be new regulations coming to address noise and water issues.

$1.2 billion in new tax revenue is significant, but Virginia’s total budget is $207 billion, and $600 million is less than the total cost of our response to the Trump administration’s cuts to Medicaid ($350 million), Affordable Care Act subsidies ($150 million), and food stamps ($150 million). The amounts we are spending do not even fully replace the federal cuts, with the State Corporation Commission estimating Virginia would have to spend $234 million to prevent an increase in the cost of ACA health insurance plans. This is why the Senate insisted on taking action on the data center issue now, and why the House and the administration ultimately decided to work with us.

Closer to home, $1 million will be invested to establish a Visitor’s Center at the W&OD Trail in Vienna. I was glad to work with Nova Parks and the Town of Vienna’s Economic Development Department to get this proposal included in the Senate’s proposed budget – but with the House’s budget including no mention of the project, I had to lobby for this along with everything else going on this summer in order to make it happen. Users of the trail have been dispirited by deforestation along stretches of the trail, and while replanting efforts are underway, this project demonstrates to the more than 2 million people who use the trail each year that the trail’s future is a priority. I look forward to sharing more news about the Town of Vienna’s plans for this facility in the near future.

Finally, as part of our reimplementation of the Regional Greenhouse Gas Initiative (RGGI) that Governor Youngkin illegally disregarded, this budget allocates 45% of the funds utilities pay based on their carbon footprint to reducing residential power bills. When RGGI became law under Governor Northam, this revenue was used for flood mitigation and energy efficiency programs. Those will continue to receive 55% of the funds, but this modification was another step we took to prioritize the affordability crisis facing Virginians.

We also gave public school teachers a 4% raise in each year, increased the standard deduction from $8,750 to $9,200, and too many more things to list in one column, but these highlights should show that this state budget was all about your budget. By reducing tax breaks for major corporations, we were able to restore some fairness to Virginia taxpayers despite the economic headwinds generated by Trump’s cuts, tariffs, and wars. There is always more work to be done, but in the end this budget agreement is a good deal to keep Virginia moving forward.