The 2025 General Assembly Session has wound down. Lots of bills and ideas have been passed, some of them good and some of them bad. The same can be said for those that were defeated. Each legislative session is simply part of the process. Just because an idea prevails, or is defeated, does not mean that it will be successful over the long haul, or stay defeated.
The primary work is to finish the budget. This year, being the short session and a state election year, we had to make amendments to the two-year budget adopted last year. In those amendments, we had to address the growing divide between the haves and have nots. We had to find a way to provide tax relief, increase our investment in education, while also trying to address the shortfall in Medicaid funding.
There were some serious challenges this year to getting the budget done.
Budget Priorities
I can report that the budget we passed provides about $1.1 billion in tax cuts. Most of that money is centered around tax rebates in the amount of $200 for single filers and $400 for married filers. We increased the refundable Earned Income Tax Credit and increased the standard deduction for the next two years. The budget also makes important investments in health care in an effort to bolster the Medicaid program but also increase our ability to respond to mental health crises and to provide services throughout the Commonwealth of Virginia.
The budget provides over $600 million in new money for K-12 education, including over $200 million to eliminate the support cap. We have been working towards this goal for some time, and I am proud that we finally are funding the state share for critical support personnel in our schools. The budget provides one-time bonuses in June for teachers, this is in addition to the 3% raises that we adopted last year. Our state employees will receive an additional 1.5% bonus.
The budget is never perfect. The spending plan includes compromises and items I do not necessarily support. (See here for a list of all the adopted amendments and here for a list of some of the highlights).
Data Centers Revisited
This year we had to face the Joint Legislative Audit and Review Commission report that highlighted the astronomical growth in energy demand, in large part because of the increase in data centers in Virginia. While data centers provide significant and important tax revenue to many of our local governments, the impact on our energy demands cannot be ignored. We are going to see our demand rise threefold by 2040.
Both the House and the Senate budgets addressed data centers. The position the Senate took essentially came from a bill I introduced based on a JLARC recommendation to require energy efficiency and the use of clean energy in order for a data center to continue receiving the sales tax exemption. The House took a completely opposite approach by simply extending the tax exemption to 2050 without any guardrails. The conference report didn’t adopt either of those provisions, rather it called for a new study of the tax exemption. Tax exemptions are a popular tool used in Virginia to incentivize certain industries. We want to bring businesses here that will grow, provide well-paying jobs, and provide tax revenue.
Frankly, we have seen a fair share of reports from JLARC that suggest the tax exemptions are often a bad deal for Virginia, either because the employment levels do not meet certain goals, the wages are low, or the deal has negative impacts on our local governments. It is probably a good idea to determine exactly how we benefit from the nearly $1 billion in tax exemptions given to data centers throughout the Commonwealth. The reality is that they are the fastest growing share of capital investment in Virginia. It is a big part of the economy, employing a lot of people and providing significant local tax revenue. However, the growth has led to unsustainable energy demand and has made it more difficult for us to meet our clean energy goals. We have to know that we are doing everything we can to achieve our goals and to provide for the long-term power needs of Virginia.
Oak Hill
A bill that would have required Virginia to acquire the Oak Hill property in Loudoun County has also generated some buzz. Oak Hill is one of President James Monroe’s homes. I have not visited the property, but everything I have heard sounds inviting. The property is rich in both its historic and natural resources and offers a wonderful opportunity for the Commonwealth. We have a great park system, and we want to invest in it. The reality is that we have about $100 million in backlog maintenance reserve. With any new opportunity to grow our park system, we have to evaluate our current ability to fund our existing commitments. The bill that required the acquisition of the property did not pass, but my sense is that it will be revisited by the Governor and by the legislature before the end of the year.
APCO
We had a significant battle over high energy costs, specifically in the Appalachian Power service territory. The company serves portions of southwest and southside Virginia, but it also continues into Amherst, Nelson, and Albemarle Counties, among the areas I represent. The rate increases have been outrageous. I heard from many individuals who were facing monthly bills upwards of $800 a month for very small homes. We have worked diligently to get a bill passed to provide some relief to customers, and we will be watching to see whether it works and how the company responds.
Looking Ahead
The legislature has adjourned sine die and is done for now. On April 2, we will return to Richmond to consider the Governor’s amendments and vetoes. A special session remains in place, and I would not be surprised to see the General Assembly meet at some point this year to address any number of potential actions taken at the federal level. We are continuing to evaluate and assess the impacts on Virginians by any new executive order or directive from Washington.
It is an honor to serve in the Senate of Virginia. Now that we have adjourned, I will return to practicing law and handling legislative work out of the Charlottesville office I share with Delegate Callsen. If I can be of help to you, please contact us at (434) 296-5491 or senatordeeds@senate.virignia.gov.
Best,
