Virginia Senate President Louise Lucas is facing a number of federal charges related to her business and political dealings, but that didn’t stop her from showing up to Monday’s much-anticipated meeting on the Commonwealth’s data center tax break.
Asked if she planned to plead not guilty to her recently unsealed indictments alleging drug trafficking and money laundering, the Portsmouth senator responded “that’s correct!”
The brief interaction occurred at a meeting Lucas herself had been waiting for: one that aimed to better understand the impact of Virginia's 18-year-old data center tax break. She and others have argued it’s cost the Commonwealth billions. It also helped turn Virginia into the data center capital of the world, raking in billions for localities. But as the facilities have grown bigger and more numerous, and their demand for energy has impacted power bills, public backlash has been unprecedented.
“The majority of people, both Democrat and Republican voters, are tired of data centers; they want a moratorium at least,” Democratic Charlottesville-area Senator Creigh Deeds told Radio IQ before the meeting started. “But the other side of that is that more than 90 percent of economic investment in Virginia is data center related.”
“So, we’re looking for a happy medium,” he added. “But I’m not sure there is one.”
The meeting itself provided some insight into their impacts and Governor Abigail Spanberger’s plans to regulate them, or ask the legislature for more limits on them during the 2027 session.
But the tax break itself, Lucas’s number one target and the issue that dragged the 2026 budget debate well into the summer, wasn’t any clearer for the President of the senate after Monday’s meeting. It led to a tense exchange between Lucas and House Appropriations Chair Delegate Luke Torian who shared the dais for the joint meeting.
“I’m not satisfied that we’ve been given enough information to make any substantial recommendations on tax policy,” Lucas said, asking for a third meeting, one held in an area impacted by data centers.
Torian appeared uninterested.
“I believe you and I had a conversation a couple days ago and we’re supposed to be having a conversation after this meeting so we can talk,” Torian told Lucas.
“But I’d still like to have those meetings I ask for,” Lucas quipped before Torian let out a kind of groan.
“We’ll talk,” Lucas said wryly.
Other members of the committee were similarly confused with what to do despite Monday’s meeting.
Roanoke-area Republican Delegate Joe McNamara wanted to know more about the return on investment the tax break has given so far. And he wondered, if Virginia did more to aggressively regulate, would it do more harm than good?
“I don’t know if Elon Musk will be successful, but Space X claims they’re going to put a constellation of data centers up in space,” he said. “There’s no taxes, no zoning. What are we doing as a Commonwealth, if we see a drastic slowdown?”
“We should be worried about water and power,” McNamara added. “But I’d like to see more about the revenues generated across the spectrum, for [data centers] and any other manufacturing industry we offer incentives for.”
Delegate Vivian Watts, a Fairfax-area Democrat and one of the chamber’s top bean counters, went the other way with her concerns, pointing to the almost-daily shifting landscape of other states regulating data centers. Perhaps Virginia still has competitive advantages she and her fellow officials could exploit.
“Everybody is realizing this is a Trojan horse and maybe not the gift horse we thought it was,” she said. “We have leverage we never had before.”
Watts also pointed to some of the ideas presented by Natural Resources Secretary David Bulova on behalf of Governor Spanberger. Bulova pointed to new regulations requiring more efficient generators for when the facilities need emergency power. He said state law now mandates these “tier four” generators, but about 13,000 “tier two” remain and must be addressed soon.
Spanberger also wants an end to nondisclosure agreements to help with transparency as well as ending by-right approval, an easy backdoor for data centers to minimize local review, for the facilities.
“People didn’t anticipate such a proliferation,” Bulova said of the by-right rollback. “Since localities are responsible for zoning, it’s the state that sets up the framework for when the zoning takes place.”
Ending both NDA’s and by-right zoning requires legislative action, Bulova said, drawing questions from some elected officials considering Governor Spanberger’s record of vetoes against her own party in 2026.
Those vetoes led to accusations of poor working relationships between the legislative and executive branches.
“Are you working with legislators?” Sen. Deeds asked Monday after the Secretary’s presentation.
“[We’re] working to develop legislation, realizing we want to do that hand-in-hand with members of the general assembly,” Bulova said. But Deeds wanted more.
“So, will you develop it and ask legislators to carry it?" Deeds pressed. "Or are we expected to pick up the ball from this presentation?”
“We’re developing specific pieces of legislation and will reach out to legislators as we move forward with that process,” Bulova said.
Other officials said the Spanberger administration had been more involved in other ways, pointing to her energy plan announced a few weeks back, and the data her people had been collecting so far.
“[She’s] embraced what I’d been pushing for, updating the rate structure that says big users have to pay the full cost of what they’re using,” Watts told Radio IQ.
When asked how many times she’d worked or spoken with Spanberger’s people?
“We need action, not just talk,” Watts replied, appearing happy with the Governor’s contributions so far.
Botetourt County Republican Delegate Terry Austin also looked to the data center energy consumption tax, a product of the summer budget compromise, as a way to recoup funds without getting rid of the tax break.
“We can recover [those funds missing from the tax break] through the tax on energy,” he said, looking for other ways to collect.
“We have to be careful as a state when we talk about repealing an incentive we negotiated, a partnership,” he said. “We can deal with noise, water and energy, and we should, and I like what I saw today around those.”
