After months of debate, standoffs, and last-minute negotiations, Virginia has a budget.
Governor Abigail Spanberger signed off on the final version of the state’s 2026-2028 spending plan on June 29, after the Virginia House and Senate approved her 14 technical amendments. The $207 billion budget closes one of the most contentious legislative sessions in recent memory — and for Prince William County residents, the details matter.
What Took So Long
The budget fight came down to one central question: how much should Virginia’s data center industry pay in taxes?
Virginia’s data centers have long enjoyed a sale and use tax exemption worth nearly $2 billion in forgone state revenue annually. The Senate — led by Finance Chair Louise Lucas — wanted to eliminate it entirely. The House and Governor Spanberger pushed back, arguing that scrapping the exemption would break faith with companies that had already invested billions in Virginia infrastructure based on those tax terms.
The standoff was real enough that state services briefly faced the threat of interruption if no deal was reached before June 30. A compromise emerged June 22: the sales tax exemption stays, but a new electricity consumption fee applies going forward. Lawmakers approved Spanberger’s final technical amendments June 29, sealing the deal.
Sen. Lucas, who hosted a data center listening tour that drew 100 residents to a Manassas hotel ballroom earlier this month, was characteristically direct about the outcome: “We had to get a budget; we were not gonna let the government be shut down, and so this was a good start for us.”
🏫 Education — The Largest Investment in Virginia History
State Democrats are calling this the largest investment in public education in Virginia history — nearly $2 billion in new education funding over the two-year cycle. For Prince William County Public Schools, one of the largest school divisions in the state with more than 90,000 students, the impact could be significant.
• Teachers and school support staff receive a 4% raise in each year of the biennium — meaningful in a county where teacher recruitment and retention has been an ongoing challenge
• State employees receive a 3.5% raise in each year
• New funding formula changes are expected to direct more money toward high-need divisions like Prince William
🏭 Data Centers — A New Tax, But Not the One the Senate Wanted
The compromise on data centers is the most consequential piece of this budget for Prince William County, which is home to one of the largest concentrations of data centers on earth.
The new Data Center Energy Consumption Fee charges data centers $0.011 per kilowatt-hour of electricity they use each month. It is expected to generate up to $1.2 billion over the two-year budget cycle. The sales tax exemption — worth nearly $2 billion annually — remains in place.
The budget also includes several regulatory hooks tied to data center operations: after July 1, 2027, data centers in the Eastern Groundwater Management Area must use air cooling, 100% recycled or stormwater, or closed-loop systems. A DEQ study on noise abatement regulations is due by 2029. And a new joint subcommittee on tax policy will study data centers further.
For eastern Prince William County communities that have been fighting new data center proposals near schools, retirement communities, and parks, the state’s new fee signals that Richmond is no longer treating the industry as untouchable — even if advocates say the compromise didn’t go far enough.
💰 Workers, Wages & New Benefits
The budget moves Virginia forward on several worker-focused priorities that will directly affect Prince William County residents:
• Minimum wage: Virginia continues its path to $15 per hour by 2028 — the current minimum is $12/hour, with scheduled increases built into the budget
• Paid Sick Leave: funded for implementation — Virginia workers will be entitled to earned sick leave under the new law
• Paid Family and Medical Leave: also funded — a significant new benefit allowing workers to take paid leave for family or medical reasons without losing their jobs or income
These are not small changes. Paid family and medical leave has been debated in Virginia for years. Getting it funded in this budget cycle is a genuine milestone for working families in the county.
🏠 Housing & Homelessness
The budget allocates more than $90 million toward affordable housing, homeless prevention, and eviction prevention programs. Prince William County has seen rents rise sharply over the past several years, and eviction filings have climbed alongside them. The state funding won’t solve the housing crisis on its own, but it represents a significant new resource for local programs.
🌿 Cannabis
The budget establishes a regulated adult-use cannabis market in Virginia, prioritizing public safety and accountability. This had been a long-running debate in the General Assembly — Virginia decriminalized cannabis years ago but had not established a full commercial market. The new framework creates licensing, taxation, and regulatory structures for legal cannabis sales statewide.
📌 Other Notable Items
• $20 million invested in sickle cell disease research — Virginia has a significant African American population disproportionately affected by the disease, and the investment reflects years of advocacy
• New investments in public safety including Virginia State Police, violence prevention initiatives, victim services, and first responders
• Safeguards built in against future federal funding cuts — a direct response to uncertainty around federal education and social services funding
What Happens Next
Most budget provisions take effect July 1, 2026 — the start of the new fiscal year. The minimum wage increases phase in over time through 2028. The data center electricity fee takes effect immediately. The paid leave programs will be implemented on a timeline set by state agencies.
For Prince William County, the full impact on local services won’t be clear until the county finalizes its own budget later this year. State education funding flows through a formula that takes time to calculate and distribute. We’ll continue to track how these dollars reach the community.
Sources: WFXR News; Virginia House Democratic Caucus statement, June 29, 2026; Virginia General Assembly budget conference report; Virginia Mercury; WHRO.
Photo: Derrick Brooks / Unsplash.
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