Virginia Democrats’ impasse over data centers could lead to first-ever partial government shutdown
Virginia Democrats are facing a standoff over data center tax incentives that could lead to a partial government shutdown if a budget agreement is not reached by the end of June. The state currently leads in data center development, benefiting from tax exemptions that supporters argue are vital for economic competitiveness. However, some lawmakers are pushing to phase out these exemptions to reclaim lost revenue for public services.
- ▪Democratic lawmakers in Virginia are at an impasse over data center development.
- ▪Virginia leads the nation in data center development with 398 centers built and more planned.
- ▪Senate Democrats are advocating to phase out the sales tax exemption for data center equipment starting in 2027.
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| Canonical URL | https://www.washingtonexaminer.com/news/4576907/virginia-democrats-impasse-data-center-shutdown-threat/ |
| Publication time | Wed, 20 May 2026 20:23:13 +0000 |
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Democratic lawmakers in Virginia are at an impasse over data center development, a standoff that could trigger a partial government shutdown if lawmakers fail to reach a budget agreement by the end of June. Virginia currently leads the nation in data center development with 398 centers built and more than 250 additional developments planned, according to Pew Research Center. The industry has flourished in large part because qualifying data centers are exempt from Virginia’s retail sales and use tax, allowing companies to purchase servers and other equipment tax-free. “Virginia will have a budget by June 30. I repeat, Virginia will have a budget by June 30,” Democratic state Sen. L. Louise Lucas said Tuesday before a Senate Finance and Appropriations Committee hearing.
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