More often than not, the state budget is late
In 8 of 14 biennial budgets this century, the Virginia legislature had to work overtime to reach agreement
The General Assembly’s inability to pass a state budget during its annual winter sessions has become more of a feature than a bug.
Four of the last five state spending plans -- including the one that would go into effect July 1 -- have required the legislature to go into overtime.
“Virginia is long past calling any kind of budget standoff unprecedented,” said Matt Moran, who was an advisor to former Gov. Glenn Youngkin.
Two longtime political observers say the frequent budget impasses this century are due to a combination of contentious issues and a competitive two-party system.
“There’s been divided government for most of the time,” noted Bob Holsworth, a former VCU political science professor. “You don’t have an alignment of priorities.”
Bill Leighty, a retired state employee who served at the highest levels of government, noted that some of the most bitter battles, like the one this year, came during times of one-party control.
“I’ve said for a long time that the greatest and most difficult battles are between the House and Senate, not D’s and R’s,” he said.
Democrats started the year with high hopes. The January inauguration of Gov. Abigail Spanberger after a 15-point landslide last November added to Democrats’ control of both chambers of the General Assembly.
But Democrats found ways to turn on each other. Spanberger angered many by vetoing several signature Democratic bills such as collective bargaining for public employees and setting up a recreational marijuana market.
The most emotional budget issue was data centers, which to many have come to symbolize the unimaginable wealth of tech executives and the potential that AI could eliminate millions of jobs.
The question came down to a lucrative tax break. In 2008, Virginia approved the tax break on the computer equipment for a nascent industry, which has grown into the largest cluster of data centers in the world. The tax break now costs Virginia $1.9 billion a year in lost revenue.
Senate Finance Chair Louise Lucas (D-Portsmouth) insisted on eliminating the equipment tax break altogether. She launched a populist tour where she bashed wealthy tech companies and, in a Trumpian flourish, ridiculed fellow Democrats by assigning them nicknames.
In social media posts, Lucas dubbed House Speaker Don Scott (D-Portsmouth) as “Amazon Don” and dismissed Spanberger as “the Data Center Diva.”
Scott and Spanberger took a more measured approach, agreeing that data centers should pay more but not wanting to break commitments to the state’s business community.
The two sides moved closer to agreement Wednesday after Lucas dropped her demands and proposed $1.7 billion in new data center “impact fees” that would offset most of the computer equipment tax break. A budget deal could be announced as soon as Friday.
Thursday was the 96th day since the General Assembly adjourned its regular winter session — and 11 days until the end of the fiscal year.
Leighty said the frequent brinkmanship makes it difficult for local governments to plan their budgets and one day could jeopardize Virginia’s AAA bond rating.
“At some point the rating agencies are going to warn us that this is not the thing to do,” Leighty said.
In an appearance Wednesday before Senate Finance and Appropriations Committee, Finance Secretary Mark Sickles agreed it was time to break the habit of budget overtime.
“We need to get our act together,” said Sickles, a former state delegate who had a front-row seat for many of this century’s budget squabbles.
CORRECTION: The original version of this story included a typo on the scale of new data center impact fees proposed by Sen. Lucas. The fees are measured in billions, not millions.