ROANOKE, Va. – Virginia lawmakers left Richmond without passing the state’s budget because lawmakers are at a standstill over whether data centers should receive tax breaks.
The General Assembly will return to Richmond for a special session to address the budget on April 23.
Currently, data centers that meet specific requirements are eligible for a tax break. So, they are exempt from paying the state retail sales and use tax on certain things like servers, networking gear, and software.
In the budget bills, the State Senate voted to end the exemption, while the House of Delegates wants to keep it.
If they get rid of it, the General Fund would gain more than one billion dollars over the next two years.
10 News spoke with Delegate Sam Rasoul, who is a Democrat, and he wants to end the data center tax exemption.
“I think the reality is that it is a huge tax break that we are giving. Certainly, I think that we should have predictability if we’re asking businesses to be investing here. But the question is, you know, what more could we be doing with those two billion dollars or at least a portion of that? And I’m, I’m hoping whatever compromise we have, we’re able to take some of that and invest it right back into Virginia,” said Del. Sam Rasoul.
He said that money could be used somewhere else.
“Right now, we see a number of localities that are struggling, especially to fund things like law enforcement, our schools, and teachers certainly need to be paid more. I think that there are a lot of investments that people are looking to make sure that we’re funding our everyday communities and not the most wealthy data centers that are out there,” said Rasoul.
10 News spoke with State Senator David Suttterlein about the issue.
He is also in favor of ending the exemption.
“These are some of the largest corporations in the world, and I think giving them special preferences that working Virginians and small businesses don’t receive is not the way we ought to go about things,” said Sen. David Suetterlein.
He also said we need to be providing tax relief to working Virginians, and we need to enhance the standard deduction.
“There’s also some dispute if there should be a rebate. I’d prefer an even higher enhanced standard deduction, but I think a rebates also a good part of that discussion. Some other folks think that instead they don’t want to have the data center tax exemption rather than enhance standard deduction for working folks or any tax relief there,” said Suetterlein. “During the General Assembly, I worked hard trying to eliminate the grocery tax. We had an opportunity to repeal the car tax. Unfortunately, the Democratic leadership voted those down on party line votes, and that’s where a lot of this debate is now.”
Many people argue that data centers bring in lots of jobs and investment to the area.
Virginia Tech Professor Cayce Myers said data centers help bring in infrastructure.
“There’s been a lot of jobs created because of this. There’s also been a lots of influx of money into communities, and the idea is that this ultimately is a net positive for the state of Virginia because there is this sort of economic impact that really can be felt at the grassroots level with employment,” said Myers. “And so the positive side of it is really on that community end and on that employment end, and it is maybe going to really kind of stand out amongst the country in terms of bringing in data centers into this area.”
He also said data centers can have negative impacts on areas.
“It changes all of these different kinds of things socially within where they are, and so that has been unpopular, particularly for those people that are living in those areas. Again, there’s also this question, this larger question within the state about, you know, when you have businesses that are worth a lot of money, providing them tax incentives on top of the revenue that they experience, is that really something that’s fair,?” said Myers.
Lots of data centers are developing in our area. One is proposed in Botetourt County, and one is in the exploratory phase in Pulaski. Wythe County confirmed an AI computing campus and data center, and a $75 billion dollar investment in Pittsylvania County has residents concerned about one there.