Virginia Democrats’ impasse over data centers could lead to first-ever partial government shutdown

Published May 20, 2026 4:23pm ET | Updated May 20, 2026 4:23pm ET



Democratic lawmakers in Virginia are at an impasse over data center development, a standoff that could trigger a partial government shutdown if lawmakers fail to reach a budget agreement by the end of June.

Virginia currently leads the nation in data center development with 398 centers built and more than 250 additional developments planned, according to Pew Research Center. The industry has flourished in large part because qualifying data centers are exempt from Virginia’s retail sales and use tax, allowing companies to purchase servers and other equipment tax-free.

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