Power Struggle
The Politics of Data Centers
By Bella Timmerding and Isabella Custard
Democrats weren't as united as expected in their return to power during the 2026 General Assembly's legislative session because of increasing grassroots opposition to proposals to build massive data centers in rural parts of the state.
The split in the party occurred over a Senate-backed proposal in the state's biennual 2027-2028 budget that rescinds an exemption on a data center sales and use tax incentive that is set to expire in 2035. The tax break was designed 18 years ago to attract tech companies to build data centers in Virginia instead of other states.
In 2008, the state Department of Taxation projected the incentives would save the data center industry $1.54 million. Instead, Virginia's tax incentive has saved the data center industry an estimated $2.7 billion in the last decade, the Joint Legislative Audit and Review Commission said in a 2025 report.
The incentive has benefited some of the world's richest tech companies–Amazon, Microsoft and Alphabet, Google’s parent company–each of which is valued at over $1 trillion. That's more than the entire yearly economic output, the gross domestic products (GDPs), of countries like Portugal and South Africa.
"That's money we need to fix roads and feed kids, not to subsidize corporate greed," said Sen. Danica Roem, D-Prince William.
The General Assembly reached an impasse over repealing the incentive tax, derailing efforts to pass a budget before the session's official end date. Gov. Abigail Spanberger has set April 23, 2026, for lawmakers to return to Richmond to resolve the deadlock. But lawmakers failed to reach an agreement during the special session. It is unclear when they will try again.
Sen. Creigh Deeds, D-Charlottesville, said the budget that Republican Gov. Glenn Youngkin proposed before leaving office was more than a half-a-billion dollars in the red. "This was just the easiest, cleanest way for us to come up with revenue," he said.
Roem said large sums of money have flowed into Virginia since 2010 and trickled down to the local level, where county supervisors exert more power than state officials to decide whether a data center gets built.
"The data center industry, they have thrown around millions of dollars, hundreds of thousands of dollars, just to donate to individual county supervisors, let alone money they throw on legislators and everything else," she said.
Big tech companies make political contributions to Democratic and Republican caucuses and committees. From there, the money is funneled through the political parties to candidates for the General Assembly, and then to members of county boards of supervisors.
Virginia State Capitol in Richmond. Photo by the Associated Press.
Surprise impasse
Julie Bolthouse, director of land use at the Piedmont Environmental Council, said the Senate's attempt to end the tax incentive was a big surprise.
"I think truthfully, it came down to the revenue question more than it actually came down to data centers themselves. And that's why I think the environmental community had no idea that was coming down the line," she said.
The House passed a version of the budget that didn't contain the repeal of the sales and use tax exemption.
The Senate's version did. Senators wanted to increase state revenue and respond to constituents' growing concerns about data centers.
Some Senate Democrats were motivated by concerns that AI data centers require more land and more resources, like electricity and water.
Spanberger tried to get the House and Senate to resolve their differences before time ran out in the session in March. She said she didn't think it was appropriate to break a promise to the industry before the exemption's official expiration.
"The Governor has made clear that data centers must pay their fair share of energy costs, plan for water usage and resource needs, and not drive up energy costs for everyone else," a spokesperson for the governor's office said in a statement to the Rockbridge Report. "Virginia can achieve these goals without going back on agreements it has made with companies that have brought business investment and substantial economic development to Virginia."
Youngkin said he agreed that data center companies should pay their share of electricity and infrastructure costs. But he worries about Virginia's losing business, he said in a statement to the Rockbridge Report.
"Whether Virginia offers incentives for data centers will influence if that investment comes to Virginia or goes to other states, which are choosing to offer significant incentives to attract this investment," he said. "Data centers will be built somewhere–that is certain."
Virginia Senate Pro Tempore Sen. Louise Lucas, D-Portsmouth. Photo by the Richmond Times-Dispatch via the Associated Press.
Local
power
Virginia's House of Delegates in session in 2025. Photo by Richmond Times-Dispatch via the Associated Press.
During the legislative session, lawmakers considered about 60 data center-related bills. Lawmakers proposed legislation addressing stricter regulatory measures such as state-level approval, siting and zoning limits, mandatory water and energy-use disclosure, and even a temporary ban on new development.
Ultimately, lawmakers passed 15 of the proposed bills, according to Multistate, an Alexandria-based government relations firm. The bills dealt with zoning, distribution costs, transparency, and water and energy use. But nothing passed that created state oversight.
"I think, unfortunately, what a lot of them were trying to do this year was appear to take action rather than take action," Bolthouse said.
At issue is whether local officials at the county Board of Supervisor level should maintain the power to decide whether a data center gets built.
Rep. Joshua Thomas, D-Prince William County, and Sen. Kannan Srinivasan, D-Loudoun County, wanted the state to have a say in whether a data center is built. But the legislation that would've brought the State Corporation Commission into the decision-making was tabled, or put off until the General Assembly's next session.
"It's the strongest data center reform legislation," Bolthouse said.
Spanberger and Youngkin are divided on whether the state should play a role in approving data center deals.
Youngkin said he believes the decision should be left to local officials. "I always believed localities should have the final call on whether data centers should be built in their community after receiving input from the community members," he said in a statement to the Rockbridge Report.
Spanberger said she supports increasing state-level oversight on data center deals.
"Local residents know the needs of their communities best," a spokesperson for the governor's office said in a statement to the Rockbridge Report.
"As Virginians consider whether or not to bring data centers to their localities, Spanberger believes the state can help local leaders make informed decisions," Spanberger's spokesperson said in the statement.
Boom or bust?
Spanberger signed only a handful of the 15 data center-related bills that passed the General Assembly. The bills she did sign will go into effect July 1.
One of the most significant bills the governor signed deals with transparency, which has become a battle cry for residents who complain that they didn't know about data centers, often until it was too late, because local officials didn't hold public hearings and refuse to answer questions about water and electricity use and changes in zoning rules.
A big fight during the legislative session revolved around transparency about data center water use and whether local officials should sign non-disclosure agreements. Data center deals are often shrouded in secrecy because the tech companies require local officials to sign NDAs, as they are known, even before negotiations begin. The NDAs prohibit local officials from discussing the projects for several years.
But lawmakers removed references to NDAs from the bill that passed. In the end, the bill required high-load facilities, which include data centers, to report monthly on their water usage.
Loudoun County already required data centers to report water usage. Srinivasan, who represents Loudoun in the Senate, introduced the bill in the General Assembly.
Rep. Terry Austin, R-Botetourt County, said data centers' water consumption is a legitimate public concern. Google is planning to build a large data center campus at the Botetourt Center at Greenfield, an industrial park in Botetourt County.
"You have to report the water consumption because water has been such a major issue here in Botetourt County in the negotiations with Google," he said.
In a statement to the Rockbridge Report, Youngkin said he supports transparency from the start.
"Data centers should be fully transparent with local communities to build trust among residents and local officials," he said. "That transparency should exist from the moment discussions begin about potentially building a data center in a specific community."
Bolthouse said the legislation got "watered down," and she wished it were stronger.
"But this is a good starting point," she said. "It gets us more than we had before in terms of transparency."
Another bill deals with ensuring that utility companies require big energy users, like data centers, to pay their share of the costs of grid and capacity expenses.
Spanberger did not sign the bill. But she sent recommendations to lawmakers to tighten language about who pays for energy programs to ensure electricity costs from data centers aren't shifted onto regular customers. If the General Assembly adopts her recommendations, she will sign the bill.
Sen. Louise Lucas, D-Portsmouth, who led data center reform during the session, introduced the bill.
The bill includes a provision allowing the State Corporation Commission to determine how certain electricity infrastructure costs are assigned. Expenses like new power lines are often spread across all ratepayers, including residents. The measure asks Dominion Energy to propose how some of the costs could be allocated in the future, potentially shifting more responsibility onto large energy users such as data centers.
The General Assembly also made strides toward helping localities make more informed decisions when considering data center deals.
One bill Spanberger signed gives localities the option to require tech companies to submit a report that examines potential data centers' impact on water, agricultural resources, and parks on or next to the site. The report also could study noise impacts on homes and schools that are within 500 feet of the facility.
The equipment within data centers generates a lot of heat and millions of gallons of water is used to cool it. Del. Rip Sullivan, D-Fairfax, introduced a bill that Spanberger signed that aims to utilize "waste heat" in nearby buildings.
"What [House bill] 323 is meant to do is to get Virginia to be more intentional about looking for opportunities to reuse the waste heat from a data center," Sullivan said.
He said recycling wasted heat is easy to do, but it's not something that data center companies prioritize unless a locality or a state asks them to.
In western Fairfax County, two schools that are being built near a data center could be heated by the facility's wasted heat, he said.
Vantage Data Centers facility in Ashburn. Photo by Business Wire via the Associated Press.
Funneling the funds
Photo by the Associated Press.
Since 2010, the data center industry has poured millions of dollars into state and local political races across Virginia.
Data from the Virginia Public Access Project (VPAP) shows technology giants like Amazon, Alphabet, the owner of Google, Meta, which owns Facebook, and Microsoft have contributed extensively to political campaigns.
"They give money to the Republicans and Democrats alike," said Roem, a Democratic senator from Prince William. And we're talking about a lot of money."
Amazon didn't start making political donations until 2014, according to VPAP, a nonprofit, non-partisan organization that provides access to campaign finance information. From 2014 to April 2026, Amazon contributed more than $2.7 million to Democrats and Republicans. Amazon donated $1.35 million to Democrats and $1.26 million to Republicans. Amazon gave $168,171 in "other" contributions, a category for donations that are not considered political and are not made to the Republican or Democratic parties.
Alphabet made its first political donation in 2015, according to VPAP. From 2015 to April 2026, Alphabet contributed $608,500 to Democrats and Republicans. Alphabet has given $376,000 to Democrats and $232,500 to Republicans. Alphabet gave no money to the "other" category.
Meta made its first political contribution in 2012, VPAP records show. From 2012 to April 2026, Meta contributed almost $449,000 to Democrats and Republicans. Meta gave $190,419 to Democrats and $203,868 to Republicans. Meta gave $53,812 to the "other" category.
Microsoft donated $212,950 from 2010 to 2020, according to VPAP. The company gave $67,000 to Democrats and $85,450 to Republicans. Microsoft gave $60,500 to the "other" category.
"Usually, the big groups will give money to the caucuses and PACs [political action committees]. Then the caucuses and PACs will funnel money back to the campaigns," said Justin Jones, political director at Clean Virginia, a nonprofit organization that donates to candidates who refuse contributions from utility companies.
VPAP records show that the tech companies donate to caucuses and committees like the Virginia Senate Republican Caucus, House Republican Campaign Committee, House Democratic Caucus, and the Senate Democratic Caucus. From there, the caucuses and committees send money to the Republican Party and Democratic Party of Virginia.
The parties then spread money around to candidates for the General Assembly. The candidates share some money with people who are running to serve on local Boards of Supervisors.
"It is like a big funnel," Jones said.
For example, Google has donated $125,000 to the House Democratic Caucus and $25,000 to the House Republican Campaign Committee since its first donation in 2015. The tech giant similarly donated to both parties in the Senate, giving $125,000 to the Virginia Senate Democratic Caucus and $107,500 to the Virginia Senate Republican Caucus.
"Incumbent supervisors and candidates for supervisor can accept unlimited amounts of money from the same donors as legislators," Roem said. "There's nothing preventing that pass-through effect from continuing on to the local level."
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Sandy Glass, a member of the Republican Committee for Campbell County, said she believes most Virginians don't know about the large donations or how they could affect decisions at the local level.
"They're trusting that their leaders are making good decisions on their behalf, and their leaders are just looking at the money," she said.
From 2010 to April 2026, the Senate Republican Caucus contributed about $5.9 million to the Republican Party of Virginia, while the House Republican Campaign Committee contributed more than $3.6 million.
From 2010 to April 2026, the Virginia Senate Democratic Caucus contributed about $8.7 million to the Democratic Party of Virginia, while the House Democratic Caucus passed on roughly $22.1 million.
State lawmakers representing Botetourt County, including Austin and Sen. Chris Head, Botetourt Republicans, have received direct contributions from major technology companies, according VPAP.
From 2010 to April 2026, Austin received $11,500 from Amazon and $500 from Meta. Head received $10,250 from Amazon and $250 from Meta during the same period.
Austin, a former member of the Botetourt County Board of Supervisors, donated $200 to candidate Todd Dodson in 2017 and $5,000 to Tim Snyder in 2025 when they were candidates for supervisor.
The two Botetourt representatives have also accepted significant donations from utilities over the past 16 years. From 2010 to April 2026, Dominion Energy made more than $91 million in contributions to statewide races in Virginia.
Most Virginia Democrats reject utility funding, according to Clean Virginia. But some Democratic lawmakers who accept the money have taken stances against data centers. The majority of Republicans accept utility funding, Clean Virginia's analysis shows.
From 2010 to April 2026, Lucas, a Democratic senator from Portsmouth, has accepted more than $1.1 million from Dominion Energy and $32,750 from Appalachian Power, according to Clean Virginia.
Head received $117,000 in direct contributions from Dominion Energy and $14,958 from Appalachian Power. Austin received $303,250 from Dominion Energy and $15,359 from Appalachian Power.
Jones, of Clean Virginia, said candidates' decision to accept funds from utilities is often viewed as a separate issue from data center reform. He said rejecting utility funds can significantly impact campaigns.
"They still have to run elections. Things are still expensive," Jones said. "Because they are rejecting this utility money, it hurts their campaign."
Austin said campaign donations do not influence his decision-making.
"I may vote in favor of the power company. I may vote against the power company," he said. "If it hurts the consumer, most often I vote against it because I work for the constituents of the commonwealth."
Jones said there is a lot of money in Virginia politics that goes unreported, making it difficult to calculate the true amount of money flowing into the state from tech giants.
"I think they put lots of money in the state, and we don't even see it," he said.
Jones said there's not enough enforcement in Virginia. He also said that when rules are enforced, the punishment is light.
"The first fine is like $100,” he said. "There are a lot of organizations that just don't care because they know nothing is going to happen to them so they do not report all of the money."