(The Center Square) – Virginia lawmakers are scheduled to return to Richmond later this month to finalize the state budget before the June 30 fiscal deadline.
The House of Delegates is scheduled to reconvene June 18 and the Senate on June 22. The two-year spending plan is to be implemented July 1 at the start of the new fiscal year.
Lawmakers did not finalize a budget during the regular General Assembly session or an earlier special session this spring.
Democratic Gov. Abigail Spanberger on Monday released an updated revenue forecast projecting an additional $1.5 billion in General Fund revenue through fiscal year 2028.
According to the administration, fiscal year 2026 revenues are projected to exceed the official forecast by $585.5 million, with another $922.6 million projected across fiscal years 2027 and 2028.
Negotiations thus far include disagreements surrounding the state’s sales and use tax exemption for data centers.
The exemption, approved in 2008 and authorized through 2035, is estimated to reduce state revenue by between $1.6 billion and $1.9 billion annually, according to state budget analyses.
Senate Finance and Appropriations Committee Chairwoman Louise Lucas, D-Portsmouth, says the rapidly growing data center industry places increasing demands on Virginia’s electric grid and water infrastructure while generating relatively few permanent jobs compared to the size of the tax incentive.
Spanberger and House Democrats have opposed ending the incentive early, saying it could discourage future investment and hurt Virginia’s business climate.
In Monday’s release, Spanberger said the updated forecast is intended to help lawmakers complete budget negotiations using the most current financial information available.
“While forecasted General Fund revenues have increased, I remain concerned by rising national economic instability, the ongoing conflict in Iran, and the continued impacts of federal workforce cuts,” Spanberger said.
Secretary of Finance Mark Sickles previously warned that parts of the economy continue showing signs of weakness despite revenues outperforming expectations.
Inflation climbed from 2.4% in February to 3.8% in April. The national unemployment rate is 4.3%; it’s been between 4.1% and 4.5% for 15 months.
The S&P 500, Nasdaq and Dow Jones are all hovering around all-time highs. The national jobs report hasn’t shown a loss since February.
Consumer confidence polls have not matched the Wall Street markets, in part because the former is more present day outlook and the latter is future based.
The administration said nearly 70% of the additional projected revenue comes from more volatile revenue sources, including nonwithheld income tax and individual refunds.
If lawmakers fail to approve a budget before July 1, state agencies, local governments and school divisions that rely on state funding could face disruptions at the start of the new fiscal year.
