Commentary: Spanberger’s Data Center Position is the Test of Her Affordability Message

On April 27, while Gov. Abigail Spanberger was in Roanoke signing twelve bipartisan workforce bills at her hundred-day mark, a group of Botetourt County residents drove over to confront her about the data center sales tax exemption.

Here’s what House lawmakers want to require of data centers to keep their sales tax break

The recently approved Google data center campus in Greenfield Industrial Park has become a flashpoint in their county. They wanted to know where the governor stood on the exemption that has made Virginia the so-called Data Center Capital of the World and is now the central holdup in the state budget.

She told them it was “wholly appropriate for the legislature to continue having conversations” about whether the exemption should exist into the future, local TV news station WSET reported. She said data centers should “pay their fair share,” particularly on energy. And she said she had “significant concerns” about retroactively changing existing contracts.

None of that was new. The governor has been saying the same three things since March. Her stated position is that she will accept whatever budget negotiators agree on, while she actively defends the contracts that are already in place. The pattern is the story.

In mid-March, with the General Assembly running out of time to pass a budget, Spanberger told reporters that “data centers should pay their fair share, and I think the commonwealth of Virginia should also abide by contracts that we sign.”

Clock ticking on Virginia budget as Democrats clash over data center tax break

On April 9, at a groundbreaking for a manufacturer of data center equipment, she said “the fact that Virginia is a reliable partner matters as much as the incentives we put on the table, and we intend to protect that reputation aggressively.”

On April 23, asked again whether the exemption should be phased out, she told Inside Climate News she would “defer” to budget negotiators on the question. Four days later, in Roanoke, the Botetourt protesters got the same answer.

The exemption at issue is the largest economic development incentive Virginia operates. It accounted for 79% of all incentive spending in fiscal year 2024 and an estimated $1.6 billion in foregone annual revenue.

Sen. Louise Lucas and the Senate budget would end it January 1, 2027, and redirect the recovered revenue toward transportation, education and local priorities. The House budget would keep it, with environmental conditions attached. The standoff has stalled the finalization of the entire $212 billion biennial budget.

A governor who wanted the Senate position to win could say so. She could issue an amendment to one of the budget bills implementing it. She could decline to defend the existing-contracts position and let her own legislative allies pull the policy in their direction. She has done none of those things.

The pattern is not limited to the exemption. On April 16, Spanberger amended Senate Bill 253 and House Bill 1393, the measures by Lucas and Del. Destiny LeVere Bolling, D-Henrico,  designed to shift certain capacity and infrastructure costs from residential ratepayers onto high-load data center customers.

Spanberger’s amendments removed the explicit cost-shift mechanism and replaced it with softer language directing the State Corporation Commission to ensure data center costs were not being subsidized by other customers. She raised the employee threshold for one of the rate-class opt-outs to 10,000, narrowing it to a small fraction of affected companies. Bill patrons and Dominion Energy alike said the changes weakened the bills.

Governor amends bills that shift costs onto data centers. Critics say her tweaks weaken them.

On April 22, the General Assembly rejected most of those amendments and sent the original bills back to her desk. She now has to decide whether to sign the legislature’s version or veto it. The legislature did not split the difference. They said no.

The governor says data centers should pay their fair share. The Senate has proposed the largest single mechanism for making them pay. She defers to negotiators on it. Her own party’s legislative leaders passed cost-shift bills. She weakened the cost-shift language. The Botetourt protesters who drove to Roanoke got the same answer she has given for two months: the legislature should keep talking.

“Fair share” in this rhetoric has the shape of a position without its substance. It commits the governor to no dollar figure and no timeline. It permits her to be on whichever side of the debate she happens to be standing in.

Spanberger ran on affordability. The first hundred days have continued the message on healthcare, housing and energy assistance. But affordability has fiscal mechanics. The Senate position on the exemption is, on the merits, an affordability position: $1.6 billion a year that currently goes to industry tax relief could go to ratepayer relief, education funding, or transportation.

Honoring existing contracts, one of the reasons Spanberger isn’t explicitly backing the Senate plan, has a reasonable case behind it. Virginia’s reputation as a reliable partner is real economic capital, and walking back signed agreements has costs that do not show up in static revenue estimates. House Speaker Don Scott, D-Portsmouth, has made that case. Industry representatives have made it. It is a defensible position, but it is a position, not institutional caution.

Virginians have watched this fight develop for two months. The governor’s position has been consistent. The General Assembly’s rejection of her amendments sent a clear message, as did the Botetourt protesters who traveled to Roanoke.  Both events suggest that the gap between the affordability message and the data center governance is becoming legible to the people who care about it most.

The budget deadline is July 1. Whatever the governor decides about the exemption, the rejected SB 253 amendments and the path forward will be the substantive test of her first six months. The hundred-day press release was the last moment she could afford to defer.

Editor’s note: This column has been corrected to reflect that the Senate proposal to end data centers’ tax exemption would take full effect for current and future operators on Jan. 1, 2027, and would not include a “phase out” approach as previously written.

by Tommy Turner, Virginia Mercury

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