Key points
- Virginia Democrats want local votes on every data center over 25 megawatts
- Virginia's plan would also ban data center NDAs with local officials
- JLARC estimated Virginia's data center tax break returned 22 cents per dollar
Virginia Gov. Abigail Spanberger and the state's Democratic legislative leaders on Nov. 10 proposed requiring a local vote on every data center that uses more than 25 megawatts of power. The proposal is part of the 2027 legislative agenda they unveiled at the state Capitol in Richmond.
Under the plan, those data centers could no longer be approved "by right," and local approval would be required regardless of prior project approvals. Democrats also want to bar data center companies from signing nondisclosure agreements with local officials. Bills for the agenda measures haven't been filed yet, the Virginia Mercury reported. The General Assembly session starts in January, and the rules would land on the world's largest data center market, where Dominion Energy (D) is the main utility.
Local votes, NDAs, and cooling water are in the plan
The agenda lists three data center proposals:
- Local approval. End by-right approval and require a local vote on any data center using more than 25 megawatts. A by-right project can go ahead under existing zoning without a project-specific public vote.
- No local NDAs. Bar a data center operator or developer from signing a nondisclosure agreement with any member of a locality's staff, board of supervisors, planning commission, or board of zoning appeals. Spanberger already banned NDAs at the state level.
- Cooling water. Require data centers to show they have minimized water use for cooling, and write Cooling Water Scarcity Areas into state law.
The governor's plan also includes putting more of the cost of transmission lines onto data center companies, the Mercury reported, though that item isn't in the two-page agenda.
The measures build on Executive Order 22, which Spanberger signed on Sept. 18. That order ended state site-readiness and expedited-permitting help for new data centers expected to draw 25 megawatts or more. Changes to local approval rules need the legislature.
A state review put the tax break at 60% of incentive spending
The agenda came a day after the Joint Legislative Audit and Review Commission, or JLARC, briefed lawmakers on Virginia's economic development incentives, the Mercury reported. Virginia spent more than $7 billion on incentives over the past decade, and 60% of it went to the sales and use tax exemption for data centers.
The exemption lets data center companies skip the state's 5.3% tax on the computer equipment they buy and replace. It cost the state $4.5 billion from fiscal 2021 through fiscal 2025. The next largest incentive cost $254 million over 10 years.
JLARC estimated that the exemption generated 22 cents in state revenue for every dollar it cost. The estimate counts the state tax revenue JLARC attributes to the incentive, not all the taxes data centers pay, and it leaves out local tax revenue. In Loudoun County, home of Data Center Alley, data centers generated $1.2 billion in real and personal property tax revenue in fiscal 2026, 39% of the county's budget, according to the county.
The estimate rests partly on a key assumption that JLARC changed. Earlier reports assumed 90% to 100% of data center activity happened because of the exemption. The new review assumes about 50%. JLARC said power availability and community acceptance may matter more than the exemption in future location decisions.
Lawmakers kept the exemption in this year's budget and added an energy consumption tax on data centers. Some legislators have promised to revisit it in the 2027 session.
A moratorium bill is also waiting
The agenda preview doesn't include a pause on new data centers. A separate bill would impose one. SB 843, prefiled on Oct. 9 for the 2027 session, would bar localities from giving final approval to data center sites from July 1, 2027, to July 1, 2030, according to the bill text. It would also bar state agencies, including the Department of Environmental Quality and the State Corporation Commission, from granting permits or other approvals for data centers, or from authorizing electric facilities to serve them, during that period. Its sponsors are Democratic Sens. Russet Perry and Danica Roem, and the agenda doesn't mention it.
We're tracking Virginia's bills, the executive order, and local fights in our data center moratorium tracker.
Cover photo: Virginia State Capitol, Richmond. xiquinhosilva / Wikimedia Commons, CC BY 4.0, cropped.
