Virginia Daily — Mar 12, 2026

Virginia's Democratic trifecta can't agree on a budget, and the thing holding it up is a tax break nobody outside the industry understood until it ballooned to $1.9 billion a year. Budget conferees have until this morning to produce a deal or the General Assembly blows past its Saturday adjournment — and the fight over whether data centers should keep buying billions in equipment tax-free is now the only leverage point reformers have left. Meanwhile, Iran just named the companies that own most of Northern Virginia's data center corridor as military targets, Richmond's new mayor is betting his first budget on housing, and a roundabout in Crozet is the most tangible good news anyone in the Commonwealth is getting today.

If you work for the Commonwealth, teach in a public school, or pay state income taxes, stop here.

Virginia's two-year budget is stuck. As of Wednesday afternoon, the House-Senate budget conference committee tasked with reconciling the House and Senate spending plans hadn't convened — and House rules require the final document to be available 48 hours before a floor vote, meaning negotiators need a deal by roughly this morning to adjourn Saturday as scheduled. The holdup isn't Republicans; the standoff centers on an intra-Democratic dispute over the data center sales tax exemption, a provision that lets qualifying facilities buy servers, networking gear, and cooling equipment without paying Virginia sales taxes.

The exemption was supposed to cost $80–100 million a year when Sen. Creigh Deeds sponsored it in 2009. It now costs more than $1.9 billion annually. The Senate wants to phase it out. The House — where members represent Loudoun, Fairfax, and Prince William, counties where data centers are a major tax base — wants to protect it. Gov. Spanberger's administration has signaled "serious concerns about going back on commitments Virginia has made to businesses," while Senate Finance Chair Louise Lucas says she won't send a budget that preserves the break.

If there's no deal by this morning, a special session looks increasingly likely. That could mean Richmond stays open, per diems stop, school divisions can't plan, and the dysfunction becomes the story. Local advocacy groups are already flagging how narrow the window has become.

This is a national security story that lands differently in Ashburn than anywhere else on Earth.

Iran's Islamic Revolutionary Guard Corps declared American tech and banking companies — specifically naming Google, Amazon, Microsoft, Nvidia, IBM, Oracle, and Palantir — as "legitimate targets" in the context of the ongoing U.S.-Iran conflict. Several AWS data centers in the Middle East have gone offline after drone strikes; Iran has claimed some strikes targeted sites hosting U.S. military workloads. Standard insurance policies typically don't cover war-related losses.

Here's the Virginia math: the Commonwealth houses roughly half of U.S. data center capacity, by some industry estimates, and routes a substantial share of global internet traffic. The companies on Iran's list collectively own and operate the majority of that infrastructure in Loudoun and Fairfax counties. A geopolitical conflict 6,000 miles away is now explicitly naming the owners of Northern Virginia's physical internet backbone. The announcement comes amid likely recalibrations of threat postures by federal facility security coordinators and county emergency management offices, though none of that will surface publicly. The social media amplification is already moving faster than official channels, which matters for local political pressure.

Iran-linked hackers also struck medical device giant Stryker in a retaliatory cyberattack this week — a reminder that the threat isn't hypothetical.

If you live or own property in the city of Richmond, Wednesday's budget speech is your preview of taxes, services, and housing policy for the next year. Mayor Danny Avula released his proposed FY 2027 budget centering on housing affordability, public safety, schools, and economic opportunity.

The prepared remarks emphasize adding "more homes for more people" and helping families stay in their neighborhoods — a clear signal that zoning changes, affordable housing incentives, or both are coming when City Council starts markups. The proposal also pitches investments to keep Richmond competitive with Northern Virginia and neighboring counties for jobs and tax base. Details on the real estate tax rate, school funding, and capital projects will drive neighborhood-by-neighborhood reactions once line items are fully digested.

The next move is City Council's. Expect hearings over the coming weeks where housing, schools, and small-business growth battle for limited dollars. If you have priorities, now is when to push them.

Just as Richmond argues over whether to tax data centers more, a project of almost unimaginable scale is taking shape 200 miles south. A developer is set to buy nearly 3,000 acres at the Southern Virginia Megasite at Berry Hill in Pittsylvania County, with a draft performance agreement outlining $73 billion in investment and 2,050 jobs over 30 years. Supporters point to proposed average salaries north of $80,000 as proof the incentives work. Critics say projects this profitable are exactly why the exemption should be restructured.

The timing is surgical. Proponents will wave this in front of budget conferees as Exhibit A for keeping the tax break. Opponents will argue that a $73 billion project doesn't need a subsidy. That argument is playing out in real time in the conference committee — if the conference committee ever meets.

For anyone who drives through western Albemarle County, today brings a concrete improvement. VDOT is opening the new roundabout at Routes 240 and 250 — an intersection that has been a congested, accident-prone headache for years. Starting today, the temporary detour on Route 680 comes down and drivers use the new circular intersection.

VDOT cautions the project isn't fully complete — crews will be working through the summer, so expect occasional lane closures. But this is a tangible quality-of-life upgrade for a rapidly growing part of Central Virginia, replacing a clunky intersection with a modern design that keeps traffic moving. Sometimes government just builds the thing.