Virginia Money Committees Reject Corporate Tax Breaks, Restore Health Care Funding, and Boost School Funding; Senate Requires Data Centers Pay Their Fair Share

Additional work is needed to make even more transformative investments in long-underfunded public services

Today, Ashley Kenneth, President and CEO of The Commonwealth Institute for Fiscal Analysis (TCI), released the following statement on the budget proposals presented by the House Appropriations Committee and Senate Finance and Appropriations Committee:

“The House and Senate money committees take a step toward building a budget that makes life more affordable for Virginia families by protecting health care, boosting education funding, and more. After Governor Youngkin proposed to cut health care funding, prioritize corporate tax cuts, and left out funding for Virginia’s new SNAP cost-share requirement, lawmakers have begun to correct course — and in some areas, move Virginia forward. 

“Undoing harmful cuts, making select investments, and closing loopholes that drain shared resources — like the Senate’s decision to end the data center tax exemption — is a strong starting point. Building a more affordable and equitable Virginia will continue to require bold choices and long-term, transformative commitments. 

On Tax Policy

“Both chambers largely rejected Youngkin’s proposal to double down on federal tax breaks for corporations and exempt taxes on tips and overtime for select workers. 

“The Senate takes critical action to ensure data centers pay their fair share in taxes, after the latest data shows that the multi-billion dollar industry was exempted from $1.6 billion in state sales and use taxes in fiscal year 2025. The Senate also proposes to do another round of tax rebates. As details emerge, we hope to see that these rebates are refundable, so that a millionaire doesn’t benefit while low-income families who need it most are left behind. 

“There’s a continued need to flip our upside-down tax code, which currently allows a millionaire to pay the same top state income tax rate as our teachers. To ease the burden on families, we will continue to advocate for a Fair Share Tax, so we have the resources to invest in family-focused tax credits, such as a state-level child tax credit, and other programs that lower the cost of child care, food, and more. 

On Public Education

“Both the House and Senate make some progress on support for students facing higher barriers while also providing some resources for the work of the Joint Subcommittee studying the transformation of the school funding formula to make it more transparent and, hopefully, more adequate and equitable. 

“The House and Senate both boost the add-on for students with disabilities, which was created last year to address the state’s severe underfunding of special education services. The House invests an additional $148.4 million over the biennium, more than doubling it, while the Senate makes a more modest contribution.

“Each chamber also increases support for students from low-income families, with the House including a one-time boost of $100 million within a larger $400 million in one-time flexible funding in the upcoming FY2027 school year, while the Senate provides $118.7 million over the upcoming two years through a combination of general and nongeneral funds. 

On Health Care

“The House and Senate budgets respond to federal actions that are creating cost and administrative barriers to health coverage and food assistance. Both include funding — $79.1 million in the House and $200 million in the Senate —  to offset rising ACA marketplace premiums since enhanced federal subsidies expired. They also set aside funding to cover likely SNAP program benefit costs resulting from new federal provisions, funding that Governor Youngkin failed to include. 

“Both chambers restore $29.5 million and continued access to the FAMIS Prenatal program, which was completely eliminated in Gov. Youngkin’s proposed budget. This program provides prenatal, labor and delivery, and sixty days postpartum coverage to certain immigrant groups and served more than 11,300 pregnant people in 2025 alone.

“Finally, we are happy to see that both budgets increase support for Virginia’s Free and Charitable Clinics by $10 million over the next two years. These facilities provide essential care to people with no or inadequate coverage and are expected to face increased demand as federal changes push people out of coverage.

On Economic Opportunity

“Both the House and Senate make some progress toward child care affordability through a public-private partnership model. The House invests an initial $25 million in this program, and the Senate provides $50 million.

“Additionally, both budgets fund their commitment to get Virginia to a $15 minimum wage, fund the infrastructure for statewide collective bargaining, support paid sick leave standards, and establish the first comprehensive Paid Family and Medical Leave program in the South. 

On Criminal Legal System

“Both the House and the Senate invest in a more fair criminal legal system. This includes funding to set the statute of limitations for court debts to ten years and increase the start of court debt collections to 180 days. The House also included funding to ensure people who work while they are incarcerated are paid at a more meaningful rate to go towards reducing their court debt. They also included funding for a new opt-out court date reminder system.

“Both chambers also make investments to improve community safety by addressing the root causes of violence. The House shifts $20 million from Operation Ceasefire to expand the Safer Communities program to Danville, Hampton, Hopewell, and Newport News, and the Senate invests $25 million for the Office of Safer Communities.

Looking Ahead

“Over the coming days, TCI will share our side-by-side analysis to highlight the specific differences between the budgets proposed by former Governor Youngkin and the House and Senate money committees. 

“We call on lawmakers to advance the strongest choices — including to ensure data centers pay their fair share of taxes — so that, together, we can invest in affordability and create opportunities for Virginia families to thrive.”