Statement of Support for Eliminating Tax Exemptions for Data Center Equipment

Background: 

Loudoun County is already home to over 200 of Virginia's 550+ data centers as is, with many more in the pipeline. The industry’s rapid expansion has created a strain on the energy grid that is rapidly evolving into a local air pollution issue as data centers build behind-the-meter generation in the absence of energy availability via the grid. Data centers are also threatening our water supplies, especially in the western part of the county. Originally projected to cost about $1.54 million annually, the tax exemption on data center equipment resulted in roughly $1.6 billion in forgone tax revenue to the Commonwealth of Virginia in fiscal year 2025. The One Big Beautiful Bill Act includes provisions that provide other tax incentives for data centers. 

Virginia has a tight budget partially due to job losses from Dept. of Government Efficiency cuts in 2025, and cuts to Medicaid and SNAP from the One Big Beautiful Bill Act. The revenue recovered from repealing the exemption could be used to help fund other priorities such as education, transportation, social services and income tax relief.

Position: 

Virginia should not be prioritizing corporate welfare for big tech over other budget priorities. The Loudoun County Democratic Committee supports ending the tax exemptions for data center equipment, consistent with the Virginia Senate version of the budget. If that position is untenable to the General Assembly as a whole, then we support enacting legislation that ties the tax credits to performance standards that require data centers located anywhere in the state to source renewable energy from within Virginia.