We are officially in the closing chapter of this year’s legislative session. The crossover deadline is behind us, and both chambers have passed their versions of the state budget. Our last two weeks will be spent trying to reconcile the House and Senate versions of the budget and finalizing the bills that will shape the year ahead.
Seniority has bestowed on me three primary responsibilities in this area. As the second-most senior member of the Finance and Appropriations Committee, I work closely with the chair to determine what priorities can move forward and what may have to wait. Secondly, serving on the Resource Subcommittee, I am tasked with balancing strong ideas alongside responsible budgeting to determine what’s feasible in the current cycle. Finally, as chair of the Health and Human Resources Subcommittee, I oversee the largest part of the state budget, which includes significant federal pass-through funding. That last responsibility is particularly significant right now because this portion of the budget is heavily impacted by federal actions affecting programs like Medicaid and SNAP. We are also dealing with the thorny issue of data centers.
Working toward a Unified Budget
Over the last 20 years, data centers have contributed significantly to economic growth in Virginia, and Virginia has more data centers than anywhere else in the world. In part, that is because much of the infrastructure to support the internet is here, but it’s also because in 2008, we passed a tax incentive to exempt the purchase of equipment for data centers from sales tax.
This year, I carried a bill, like the one I sponsored last session, to add requirements for data centers to operate efficiently in order to receive the tax exemptions. It was modeled after recommendations from the Joint Legislative Audit and Review Commission. The legislation failed to pass in the Senate both years as there is not a uniform view that the tax credit should be extended irrespective of the cost. The Senate budget includes language to end the tax credits effective January 1, 2027, thereby realizing an estimated $549.9 million in revenues in fiscal year 2027. The House passed a bill to extend the credit and add some additional guardrails. I expect these issues will be resolved in the budget.
Community Funding Priorities Moving Forward
As I do most years, I sponsored many budget amendments to support local community organizations. The Senate budget adopted last week included a number of those priorities. I will only highlight a few.
As February marked Black History Month, I am pleased to share that the Senate budget includes funding for the Jefferson School African American Heritage Center. At a time when actions at the federal level seek to cherry-pick which parts of our American story fit a political agenda, it is important to support programs that preserve and teach African American history.
In that same spirit of strengthening and sustaining our communities, the Senate budget increased funding for Community Action Agencies (CAAs). Recent federal administrative actions have withheld funds and imposed operational cuts that impacted support to states for these agencies. The final approval of these funds will help the continuation of essential programs in our district provided by Monticello Area Community Action Agency and the Lynchburg Community Action Group, including Head Start, Hope House, and rural outreach services.
Investing in maternal and child health was another key budget priority this session. Funding has been approved for a pilot program to develop Perinatal Health Hubs to reduce maternal and infant mortality. The Midwifery Workgroup will also move forward to address barriers preventing some Virginia-licensed midwives from contracting with managed care organizations under Cardinal Care. The goal is to ensure members can access midwifery services without leaving their health plan. This is an issue frequently raised by mothers in rural communities where hospital access is limited.
Budget Conference
As we head into the final stretch of session, the House and Senate will spend the next two weeks reconciling differences in the budget. A full list of Senate and House approved amendments is available here. While there are significant differences in each budget proposal, particularly related to the data center tax exemption, I remain confident that we will reach a responsible agreement that positions Virginia to move forward and continue serving the needs of our communities.
As always, it’s a privilege to serve you in the Senate of Virginia. I look forward to using these newsletters to keep you up to date on my work in the coming weeks. If you would like to visit the Capitol or the General Assembly Building, you can find information on tours and visiting hours here. If I can be of service or if you have questions or comments, please contact us at (804) 698-7511 or senatordeeds@senate.virginia.gov.
Sincerely,
