Virginia Gov. Abigail Spanberger on Friday rolled out a plan designed to respond to concerns about how data centers are operating in the state.
The implications of data center policy are important because localities, especially in Norther Virginia, are seeing data centers becoming an increasingly major part of their tax bases.
"Virginia is putting a stop to the secrecy that this industry so frequently relies on, and we're doing that by increasing transparency and giving communities a much more significant voice in the process," said Spanberger.
The comments came during a press conference in which the Governor laid out a framework of five priorities listed in an executive order that tasks the state legislature to write new regulations dealing with transparency, environmental protections, energy costs, clean energy, and a focus on local workers.
"Part of that means banning non-disclosure agreements for commercial projects because oftentimes they keep neighbors in the dark about what's being planned in their backyards," said Spanberger.
She's also leaning into requiring community benefit agreements that lay out exactly what data center operators are doing for the neighborhoods where they are located.
Loudoun County in Northern Virginia is acknowledged as the data center capital of the world thanks to an abundance of fiber optic cable capacity, its proximity to Washington DC, and a 2010 sales tax exemption law.
The data center industry is expected to produce $1.3 billion in tax revenue for Loudoun County this year, but opponents say the exemptions are costing much more than the jobs and property taxes they are generating.
According to the National Conference of State Legislators "of the 38 states currently offering tax incentives to data centers, all of them waive sales taxes on essential data center equipment, including computers; 14 of the states extend that exemption to electricity used at the facilities, while 11 states also offer data centers a partial property tax abatement."
Lawmakers in 28 of those 38 states have now introduced proposals that would that would substantially amend existing tax breaks.
The Governor's plan does not include a total moratorium on data center development as other states and municipalities have embraced.
The executive order is intended to guide the General Assembly towards writing new laws when it convenes in January.
Spanberger faced calls for the end of sales tax exemption not long after taking office and the debate over their future continues to fan flames of opposition.
Earlier this month, Rep. Suhas Subramanyam, the Democratic representative from Virginia's 10th district, which includes "data center alley," introduced four bills aimed at reforming how the centers are sited and operate.
"People are concerned about the future of our community and angry about the impact this will have on noise, the environment, and their property," said Subramanyam.
"The approach to building data centers has been driven by short-term profit rather than long term planning."
Opposition to data centers cuts across party lines and the issue is now steering the political positions that will decide the midterm elections.
Technology firms pumping billions into the economy to expand the use of artificial intelligence are also exposed to more risk from the backlash.
A report from the Brookings Institution notes, "Any pause, audit, or moratorium that slows AI adoption could challenge widely shared business expectations and creates financial difficulties not only for specific firms, but the overall economy."
