Dozens of electricians, all union workers who help build data centers across Virginia, attended a meeting of the Senate Finance committee Tuesday. They were there to urge negotiators to keep tax breaks for data centers, a sticking point in the ongoing fight over Virginia’s budget.
“In order to get those 2,500 jobs, you’re talking about 40 additional data centers with no way to provide the power, the water and all the other infrastructure,” Senate President Louise Lucas said during Tuesday’s meeting.
The firebrand Portsmouth-area Senator was speaking with Virginia’s Secretary of Finance, former Delegate Mark Sickles, in her first legislative appearance since the FBI raided two of her weed shops.
But the raids weren’t the hot topic; the data center tax break, one that helped turn Virginia into an internet traffic hub, was instead. Lucas wants to see it end in order to fund billions in new state programs and plug holes made by President Donald Trump’s federal spending cuts.
“I remain committed that data centers, who employ very few permanent jobs for a sizable tax giveaway, should pay sales tax on computer equipment,” Lucas said, defending the idea.
The "2,500 job" project in question, first reported by Cardinal News, is located in Pittsylvania County at the Berry Hill megasite. With an estimated $100 billion in promised investment, local officials approved the project Monday, but with the caveat that the tax break Lucas is targeting will stay in place.
“The project is dependent upon the state honoring its commitments to existing agreements, including the state’s current data center sales and use tax exemption expiration date,” Matt Rowe, economic development director for Pittsylvania County, said at the meeting.
Orange County Senator Bryce Reeves, a Republican member of the Finance Committee, said he’s already hearing rumblings from the data center industry outside the Commonwealth about possible changes in Virginia.
“You’re kicking people out who are bringing businesses in? The data centers are being eaten up by federal agencies who need the bandwidth,” he said, suggesting maybe a phase-out plan as a compromise — keeping benefits for existing data centers while limiting it going forward.
But either way, he said he wouldn’t support a full rollback of the tax break, especially for businesses who came here because of the tax break.
“You made a promise to people who have spent billions of dollars,” he said. “That’s not a fair deal and it's not right.”
While not directly from Governor Abigail Spanberger herself, Secretary Sickles, as a part of her administration, mentioned the recent failure of a data center project in Prince William County. In a letter Sickles said came from Compass Data Centers, those behind the Prince William project, company officials blamed Lucas’ threats for harming Virginia’s reputation for business.
“The current legislative environment in Virginia no longer makes these kinds of investments viable,” he said, reading from the letter.
“They were looking at cites in rural parts of the state, but they’ve since quit that,” he added.
But Lucas isn't without allies. Senator Danica Roem, whose district includes since-quashed Prince William County project, has long been a critic of an industry she says exploits Virginians.
"Every other industry in Virginia has to pay its fair share of the sales tax," Roem, who authored the budget amendment that cut the tax break, told Radio IQ. "There's no reason why taxpayer dollars should be forked over to a multi-trillion-dollar industry."
And Roem noted, despite future tax break concerns, other data center companies in her district are still fighting to get facilities in place.
"That's money we need to fix roads and feed kids," she added. "Not subsidize corporate greed."
Meanwhile, out in the hallway after the meeting union electricians confronted Senate Majority Leader Scott Surovell on the idea.
“I’ve already lost a marriage, traveling, for 15 years, trying to feed my family,” said Richmond IBEW 666 member Dorian Hargrave. ‘I’d like to have this economy bolstered and stay like it is, right here in Virginia.”
“My grandfather was an electrician; he took a bunch of classes during the Great Depression and it's what gave him a career. He ended up being the lead electrician on the Roanoke star,” Surovell told the group. “That job supported my grandfather his entire life, his whole family, put two kids through college, and I probably wouldn’t be here if he hadn't of [done that].”
“The jobs are important; jobs for people who don’t wear a collar like me are important,” he said.
Senate budget negotiators plan to meet again in late June. Leading budget negotiators in the House, which kept the data center sales tax exemption in place, did not return requests for comment.
The deadline to pass a budget is June 30th.
As for Lucas's interactions with the FBI, she did not comment on the events directly.
Instead, when a presentation by the state's Treasury Department suggested Virginians could look up money the state has on hold for them online via their phones, Lucas said: “I can’t check cause I don’t have my phone,” likely referring to the confiscation of her phone by federal agents.
“I’ll check once I get my phone back,” she said, ending the meeting.
