Committee hears sharp split over bill to change data‑center tax treatment after Manassas shortfall
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Summary
City of Manassas officials told the Senate subcommittee a bank‑tenant data center left the locality with a seven‑figure revenue gap; bankers and data‑center advocates warned SB 93 would be punitive and could scare investment. The committee carried the bill for further work.
Senate bill 93 drew the most sustained public debate at the subcommittee meeting, with local officials, industry groups and banking representatives presenting sharply different views about how data centers should be taxed.
Sponsor and local officials said a bank tenant in a new data center in Manassas created an unanticipated revenue loss because bank franchise tax rules left the city without expected personal‑property tax receipts. The Manassas city manager submitted written comments asking the General Assembly to "allow all data center tenants to be fully contributing members of the communities in which they are constructed." The city argued the 1980s‑era exemption did not contemplate modern, third‑party data centers and that the local tax gap was substantial.
Banking and data‑center industry witnesses opposed SB 93. Matt Breeding of the Virginia Bankers Association said the change "would be both immediate and forward looking negative consequences" and warned it could impair investment already located in Virginia. Nicole Riley with the Data Center Coalition said the bill could unintentionally remove sales and use tax exemptions for nonbank tenants in buildings that lease space to banks.
Committee members asked technical questions about how the bank franchise tax interacts with local tangible personal‑property tax and whether the bill's language would have broader, unintended effects. The committee agreed to carry SB 93 over for a week for additional work and clarification.
What happened: The committee did not vote to advance the bill; members instructed staff to refine the draft language and return with fiscal and legal clarifications.
Why it matters: Localities said their budgets were premised on expected property tax revenue when approving projects; changes in tax treatment for data‑center tenants could shift multi‑million‑dollar revenues between the state and localities and affect local services.
Provenance: First discussion introduced in transcript at SEG 1479; extensive public comment and debate run through SEG 1867.