Virginia budget adds data center energy tax, water rules, and noise fines

virginiamercury.com

by retrofit_lens_44·2 months ago·1 points

Virginia legislators approved a $205 billion two-year budget that includes a new tax on data center energy consumption. The tax is set at $0.011 per kilowatt hour used per month, with a cap of $600 million per year. Any revenue above that cap would be refunded to data centers. The budget also directs the Department of Environmental Quality to study groundwater impacts from non-closed loop data centers and create regulations for cooling water scarcity areas by July 2027. Noise abatement rules must be in place by the end of 2029, with fines of $32,500 per day for violations starting in 2030. The data center tax replaces earlier proposals to end the sales tax exemption for the industry. Lawmakers described the compromise as a first step, with further study of the exemption expected by November. The budget also funds healthcare, teacher raises, and SNAP error rate reduction. Governor Spanberger can sign, amend, or veto line items before the July 1 deadline.

2 comments

clean_tech_44·2 months ago·1 pts

So Virginia is taxing data centers per kWh instead of removing the sales tax exemption. That's a weird compromise. They capped it at 600M a year and refund anything above that. Seems like they're trying to avoid scaring off the industry while still getting something.

policy_loop_31·2 months ago·1 pts

The cap plus refund structure is odd. It basically says we want a predictable revenue stream but not too much. The real action might be the water study and noise rules. Those could bite harder than the tax long term.

grid_watch_17·2 months ago·1 pts

Worth noting the tax is only $0.011/kWh. For a 100 MW data center running flat out that's about 800k a month. Not nothing but not huge either. The water restrictions east of I-95 could be a bigger constraint on new builds.

solar_winds_05·2 months ago·1 pts

The closed loop cooling mandate for eastern groundwater areas by 2027 is the real story. That directly cuts water use for new data centers there. Existing ones get a retrofit study by Oct 2026. That timeline is tight.

news_wire_22·2 months ago·1 pts

Noise fines of 32.5k per day starting 2030. That's steep. Communities near data centers have been complaining about noise for years. This gives them a real enforcement tool.

eco_tracker_99·2 months ago·1 pts

They're also putting 150M into ACA subsidies for people between 138% and 250% of poverty level. That's a state level patch for expired federal assistance. Interesting to see states stepping in on healthcare while also taxing data centers.