Virginia Budget Deal Shortchanges Clean Water, Conservation Priorities

Virginia lawmakers in the House and Senate this weekend rolled out a compromise proposal for the biennial budget that starts on July 1, which unfortunately shortchanges clean water and conservation priorities in the first budget that will be enacted under the revised Chesapeake Bay agreement.

Among the most concerning items: steering nearly half of revenues from the Regional Greenhouse Gas Initiative (RGGI), a regional carbon trading program for power plants, away from programs like flood preparedness and energy efficiency efforts for low-income residents to accommodate recent scare tactics from the power industry over utility rates.

The proposal moves toward requiring data centers to use recycled water or other non-wasteful means for cooling—one of the standards the Chesapeake Bay Foundation (CBF), the Southern Environmental Law Center (SELC), and Appalachian Voices had urged lawmakers to develop. Unfortunately, the deal largely fails to tackle the environmental impacts of data centers, which are increasingly threatening the water and air quality in Virginia and consuming massive amounts of energy—helping drive up consumer utility bills.

At the same time, the budget proposal maintains a state sales and use tax break for data centers that cost Virginia about $1.9 billion last year alone and directs a panel to study potential reforms that won’t report back to lawmakers until December. The deal also establishes a $1.2 billion fee tied to data center energy consumption.

In one positive, for 2027 the deal also fully funds the Virginia Agricultural Cost-Share Program, which helps farmers install projects that reduce pollution to local waterways.

But overall, negotiators did not include sufficient funding for an array of other clean water and conservation priorities as well.

Those include:

• Wastewater treatment plant funding. The budget deal adds almost $189 million for matching grants for wastewater treatment improvement projects, bringing investments up to $329.5 million for the state share of wastewater treatment plant improvements. This is short of Virginia’s own needs assessment to upgrade our wastewater systems. The ongoing modernization of wastewater treatment plants has greatly reduced pollution to the Chesapeake Bay.
• Virginia Conservation Assistance Program. The deal includes $4 million for the Virginia Conservation Assistance Program, which helps private property owners and community groups install nature-based projects that cut stormwater pollution. CBF had pushed to increase funding to at least $8 million over the biennium, as the highly successful program is over-subscribed.
• Menhaden. The proposal does not include $2 million for much-needed research into the menhaden population in Commonwealth waterways that House lawmakers had included in earlier versions. Atlantic menhaden are a critical forage fish in the Bay serving as a food source for a variety of species including striped bass, redfish, humpback whales, and birds like osprey and bald eagles. Their abundance directly affects commercial and recreational fisheries, tourism, and coastal communities.
• Stormwater upgrades. House and Senate lawmakers included $43.5 million for the Stormwater Local Assistance Fund, which provides grants for stormwater design with an eye toward cutting water pollution. CBF had advocated for $50 million.

Chesapeake Bay Foundation Virginia Policy Manager Jay Ford issued the following statement:

“This budget deal fails to meet the moment and will mean dirtier air and water for residents of the Commonwealth.”

“We appreciate the investments in clean water resources, but had hoped to see more meaningful solutions addressing the harm to Virginia communities from the unchecked data center boom.”

“Virginia’s rejoining of the Regional Greenhouse Gas Initiative is a step forward. But it’s shortsighted to shift almost half of all RGGI proceeds away from vital resilience programs to accommodate scare tactics from the power industry. Before pulling from underfunded programs that protect our communities and permanently lower electricity costs for low-income Virginians, we should look first to hold the industry accountable.”

“It’s encouraging that data centers could be required to use more environmentally friendly cooling methods, but there must be additional clean energy requirements if Virginia hopes to rein in their negative impacts on our air and water.”

“We are also deeply concerned that lawmakers failed to include funding for a much-needed study on the menhaden population in the Chesapeake Bay once again. This research is vital for understanding the flashing warning signs we are seeing for menhaden in the Bay.”