Where Are We with the Budget?

March 24, 2026

Thanks to Senator Creigh Deeds for the following:

“Under Virginia’s budget process, governors introduce budgets in December. In odd-numbered years after a gubernatorial election, this creates an unusual start for a new administration. Governor Spanberger began her term working from a budget proposed by her predecessor from a different party with different priorities. While some governors quickly rewrite the document and others wait for the General Assembly to act before shaping it, Gov. Spanberger opted for the latter.

 

“The outgoing governor introduced a structurally imbalanced budget, relying heavily on one-time funding and setting up future shortfalls that could become unconstitutional. We navigated dramatic federal subsidy cuts shifting over $100 million in SNAP administrative costs to the state. We managed the $3.2 billion Medicaid re-forecast, though significant cuts associated with President Trump’s One Big Beautiful Bill are still on the horizon in 2027. The House and Senate addressed these challenges through their own budget proposals that must now be merged into a final budget. In the Senate, we worked on identifying new revenue, primarily from advancing the expiration of tax credits for data centers, to fill the gaps.

 

“Virginia first offered a sales tax exemption in 2008 to attract data centers, at an estimated cost of about $1.5 million a year. The figure has grown to roughly $1.9 billion, raising important questions about fairness and long-term budget stability. Some argue the exemption is contractual, but each agreement allows for changes. As budget negotiations continue, we are working with data center companies to close the gap between the House and Senate proposals. The budget is the most consequential part of the General Assembly session, so stay tuned.