Virginia lawmakers have finalized a new state budget that preserves a lucrative $2 billion sales tax exemption for data centers, a key industry in the commonwealth, while simultaneously imposing a new energy tax on these facilities. This legislative compromise emerged from intense negotiations where some lawmakers sought to repeal the longstanding tax break amidst growing public scrutiny of the server farms' heavy demands on resources. Lobbyists for the data center industry reportedly proposed the energy tax in exchange for recommitting to the sales tax exemption.
In another significant development, Virginia has legalized the sale of recreational cannabis, five years after possession became legal. An amendment in the recently passed state budget permits up to 350 licensed cannabis sellers to open starting next year. The legislation includes provisions to ensure market competition, creates strict penalties for selling to minors, and raises the possession limit to two ounces.
The new state budget, which took effect on July 1, also brings several other changes for Virginians. Teachers and state employees will receive raises, and many residents could see lower state income tax bills due to a larger standard deduction. Additionally, gun owners face new legal requirements, including locking up firearms in homes where children live, a $250 fine for leaving a handgun unsecured in an unlocked vehicle, and a ban on bringing guns into certain hospitals and emergency rooms.
Further budget allocations include $15 million in state funding for the demolition of the vacant Richmond Coliseum, with plans to replace it with a new hotel and convention center anchor. The budget also extends funding for two more years for a commission studying the historical displacement of Black communities by Virginia colleges and universities and establishes a new State Climate Office at George Mason University to address climate challenges.