It may seem to be a quiet time in Virginia politics, but it is also a time when our lawmakers can draft bills among competing interests that have sufficient support to actually pass. Virginia’s last two legislative sessions did not do very much, as the governor and legislature often disagreed. With a record large number of vetoes by the governor over the past two years (approximately 400!), much less was done to improve the lives of Virginians than either party wanted. This year brings new opportunities, and the legislature and governor should be much more aligned in their goals. However, Virginia faces many problems going forward, so they face quite a challenge.
The state budget has been healthy, running surpluses and building a nice nest egg. This year, things have changed considerably. The federal government has removed much of its support for state administered programs affecting healthcare, food availability and energy production. The federal government also cut (by May 2025) more than $265 million from Virginia university research grants. This is all happening even though Virginia consistently sends more money to the federal government than it receives in return – for example in fiscal year 2024, Virginia sent about $89 billion more to the federal government than it received back. Our unemployment rate is projected to rise, accompanied by a loss in tax dollars from those without a paycheck. With the national economy not doing well, inflation increasing, and health care costs spiraling upwards, many Virginians are going to need help. Our 2026 legislators will be facing an extremely difficult situation as they enter office this January.
Perhaps the largest area of gridlock over the past few years has been controlling the rise of energy costs. In Virginia, the demand for energy has been increasing extremely quickly, a trend expected to accelerate even more. Virginia is the global leader in data centers, currently having about 13 percent of all data centers capacity in the world! Data centers are used for things such as websites, cloud-based platforms, email, media streaming and bitcoins. These data centers use enormous amounts of energy. While projections vary, in the next 15 years a reasonable estimate is that the total energy use in the Commonwealth might double because of these centers. There also is a good chance it might be more. And we simply do not currently have the capacity to generate so much energy.
Where is new production going to come from? We might build nuclear plants – but those take at least 10 years to get permit approval and build, and who wants one of those anyway? We might expand the use of natural gas – but new turbines are backlogged about eight years, and no one wants a big gas powerplant in their backyard either, or new pipelines going through their neighborhoods. Solar and wind now are the cheapest long term energy producers, but the federal government is strongly discouraging them by removing financial and siting support. Yet, data centers add substantially to the local and state economy, providing jobs (primarily during construction) and very meaningful tax dollars. There is not a clear long-term solution. Let’s support our legislators in coming up with good ideas how to manage this, while remembering the basic economic principle that when demand exceeds supply, prices rise.
