15 things to know about the budget deal Virginia lawmakers just reached

Virginia has a budget deal.

It’s late in the sense that the expectation had been the General Assembly would work this out before it adjourned back in March. However, it comes 12 days before the state starts a new budget year, so lawmakers will apparently not be taking things to the brink. The legislature reconvenes Monday to take up the spending plan that House and Senate negotiators released Friday night.

The exact details (which will be voluminous) haven’t been posted on the General Assembly’s website yet. We do, however, have a 68-page summary that outlines what’s in the deal. The headliner: a compromise on data center taxation that keeps the controversial tax incentives in place but creates a new tax on the electricity they use.

The other highlights — as seen from the standpoint of Southwest and Southside — include funding to start construction of an inland port in Washington County and expand the Virginia Tech Carilion School of Medicine, as well as language authorizing a formal partnership between George Mason University and Averett University. One surprise: $100,000 to fund a statue in Roanoke of the late judge and lawmaker Onzlee Ware.

Gov. Abigail Spanberger and legislative leaders had earlier reached an agreement on how to legalize retail sales of cannabis. That’s now included in the budget deal, with sales starting July 1, 2027. See the earlier story by Cardinal’s Richmond-based reporter Elizabeth Beyer for details.

Here’s an overview of what we know — with the caveat that more details will be forthcoming when the actual budget language is available.

1. Data center taxation compromise

The main reason that the budget took so long is that Senate Finance Chair Louise Lucas, D-Portsmouth, spent weeks insisting that the state should eliminate its tax breaks for data centers eight years early. That brought pushback from both the governor and House leaders, who worried that would send a signal to other business sectors that the state can’t be trusted.

This deal keeps the tax breaks for data centers intact (they’re set to expire in 2035). Instead, it creates a tax on the electricity that data centers consume. When that was floated earlier in the week, business groups pushed back against it. The version in the budget deal calls for the revenue collected through that tax to be capped at $600 million a year — and says that any monies collected over that be refunded on a pro-rated basis at the end of the fiscal year. It was unclear what the reaction to this will be, but collecting $600 million a year seems a significant climb-down compared to those who wanted to do away with the tax exemption that forgoes $1.9 billion per year in exchange for $9.1 billion in gross domestic product from data centers.

The summary also says there will be at least four items in the budget that will set in motion new regulations. Among them are references to “data center noise regulation language” and “data center cooling water scarcity regulations.”

2. Inland port in Washington County

An “inland port” does not involve water or ships. Instead, it’s the industry term for a freight hub that collects cargo headed to or from a water port. Virginia already has an inland port near Front Royal that facilitates rail shipments to and from Hampton Roads; it’s also spurred thousands of warehouse and trucking jobs in the northern Shenandoah Valley.

Legislators in Southwest Virginia — led by state Sen. Todd Pillion, R-Washington County — have been pushing for several years to create a similar inland port in Southwest Virginia, specifically at the Oak Park Center for Business and Industry in Washington County.

This deal includes $20 million to get construction started. (Pillion is one of the budget negotiators so was in a position to make sure this money was included in the budget.)

3. Virginia Tech Carilion School of Medicine and other healthcare workforce funding

The school in Roanoke is slated to get $13 million for expansion as part of a larger $74.4 million plan to expand the healthcare workforce.

Nursing programs at James Madison University, Radford University and the University of Mary Washington will get a total of $7.6 million.

The budget deal also includes $6 million for the Virginia Tech Patient Research Center and $500,000 for workforce development programs in the Roanoke Valley and Alleghany Highlands in healthcare and biomedical sciences fields.

4. Interstate 81

The budget directs the secretary of transportation to “evaluate options to Accelerate I-81 Projects; including tolling options as long as there are 2 toll-free lanes in each direction.” That seems to foreshadow a third lane that might have tolls. Del. Terry Austin, R-Botetourt County and a budget negotiator, said Secretary of Transportation Nick Donahue wanted that provision.

5. Virginia Coalfields Expressway

The slow-moving road project that’s slated to run through Buchanan County and Dickenson County gets $7 million for improvements to U.S. 460 in Buchanan County.

6. New College Institute

The budget changes the name of the Martinsville-based center from the New College Institute to the West Piedmont Higher Education Center and includes funding in the second year of the two-year budget. When then-Gov. Glenn Youngkin introduced his budget back in December, he had zeroed out that second-year funding.

7. George Mason University/Averett University

Del. David Reid, D-Loudoun County, has pushed for a formal partnership between the public school in Northern Virginia and the private school in Danville as a way to expand GMU’s reach. The budget deal includes the language to make that happen. It’s unclear what that will mean in practice, but the budget language authorizes George Mason to work with Averett on both undergraduate and graduate programs as well as other workforce-related issues. There’s no money attached, but the language lists multiple groups that would be allowed to help fund this work, including the GO Virginia economic development program, the Tobacco Commission, the Virginia Economic Development Partnership, the Danville Regional Foundation and other nonprofits.

“I’m pleased GMU will now have official authorization to move forward in what is probably the most dynamic economic area of the Commonwealth,” Reid said in a text message.

8. Onzlee Ware statue in Roanoke

An unexpected item was $100,000 for a “Roanoke commemoration.” Legislators said this was for a statue to the late Onzlee Ware, the first Black state legislator west of the Blue Ridge and later a judge.

House Appropriations Chair Luke Torian, D-Prince William County, was cited as the proponent of this measure. “Onzlee was a bit of a mentor to Torian,” said Del. Sam Rasoul, D-Roanoke, a member of the House Appropriations Committee.

9. Local referendums on sales tax increases for schools

At present, nine localities are authorized to hold referendums to increase the local sales tax, with the proceeds going to schools. There’s been a push to expand that power statewide. In this year’s General Assembly session, bills related to these local referendums were set aside with the expectation that they’d simply be written into the budget. Now they are, with the sales tax increase capped at 1%.

10. State funding formula

A panel will be appointed to study whether and how to change the state’s school funding formula; $1.3 million is set aside for this.

11. New or renovated college buildings

There’s money (unclear how much) to renovate Derring Hall at Virginia Tech and Darden Hall at the University of Virginia’s College at Wise.

12. Institute for Advanced Learning and Research

The Center for Advanced Manufacturing at the Danville institute is slated to get money for expansion, although it was unclear how much.

13. Housing

The lack of housing — and the high cost of what is available — has been the subject of legislative attention. Among the initiatives: This budget deal authorizes a state loan for Newport News to develop housing around the shipyard as well as other housing construction initiatives in Fairfax County and Prince William County.

14. Richmond Coliseum

The budget deal includes $15 million to help Richmond demolish the Richmond Coliseum, which has been deemed to be obsolete.

15. Tourism

Included in tourism funding is $100,000 for the annual Blue Highway Fest in Wise County. We’ve previously written about that award-winning music festival. Another tourism-related funding item is $305,000 for Breaks Interstate Park, the Virginia side of which is in Dickenson County.

You can read the full summary below. We’ll take a deeper look at the budget deal once we can see the actual language.

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