Concerns mount over local impact of Va. budget stalemate as Democrats promise a deal before deadline

CHARLOTTESVILLE, Va. (WVIR) - Concerns are mounting over the prolonged state budget stalemate, as Virginia approaches what could be its first-ever partial government shutdown.

The pressure is on Virginia Democrats, who control the House of Delegates, State Senate, and Governor’s Mansion, as a months-long standoff over tax exemptions for data centers pushes on.

While Democratic legislators and Governor Abigail Spanberger say they’re getting closer to an agreement and are confident they’ll come up with a budget before the June 30 deadline, some say the extended impasse is already sparking uncertainty across the Commonwealth - including for Virginia’s schools.

“What that causes is a lot of confusion, and a lot of unease,” Carol Bauer, President of the Virginia Education Association, told 29News.

Because local school divisions rely on state funding to make key financial decisions, Bauer says the need for a concrete budget in Richmond is urgent for teachers and staff across the Commonwealth.

“Some school divisions are saying well...we’re going to put forward the money that we think we’re going to get from the state, and we’re going to provide these contracts,” Bauer said. “Some are saying we are not going to provide contracts until we get the actual money from the state...Certainly, going into next year, you want to make sure that you have a contract, you want to make sure you know what your funding is going to be, and what your salary is going to be.”

In a statement to 29News, the Virginia Association of School Superintendents (VASS) similarly urged state lawmakers to reach a resolution.

“VASS continues to advocate for a completed state budget before the June 30^th deadline as it impacts teacher contracts and the ability to staff our schools for the next school year," the statement reads.

For Charlottesville City Schools, state funding constitutes about 19% of the total budget they’ve created for the next fiscal year. In a statement to 29News, a spokesperson for CCS said that the school division has “received assurances that its 2026-2027 budget will be fully funded and are therefore moving forward with budget plans.”

What poses a challenge, Charlottesville City Councilor Michael Payne says, are the financial discrepancies between the House and Senate versions of the budget, particularly as the City plans significant raises for teachers and support staff.

“There’s a difference of millions of dollars that would go to our local City schools,” Payne said. “When we don’t know what the funding amount will actually be, it just makes it harder for us to know, in order for us to meet the schools need, are we going to need to invest X million dollars more than we budgeted for.”

An even larger concern is what could happen if Democratic lawmakers cannot find middle ground. While the Senate’s version of the budget does away with the sales and use tax exemption for data centers, the House version’s keeps it. Governor Spanberger, too, says she does not support ending the exemption early, telling Cardinal News “I’m not going to break a contract the state has signed.”

Senate Minority Leader Ryan McDougle told 29News that the state budget, which should have been completed back in March, is essential for keeping communities functioning across the Commonwealth.

“If we do not have a budget, the end of this month, then state employees will not be able to get paid, state government will in essence shutdown,” McDougle said. “It needs to be faster so that local governments can make decisions.

On Monday, Democratic Delegate Katrina Callsen told 29News she’s confident that they’ll be able to come up with a budget once lawmakers return to the state capital in late June.

“We’re all committed to getting a budget passed, and that’s what I expect to see when we go back to Richmond,” Callsen said.

Senate President Louise Lucas also took to social media on Tuesday afternoon, noting that there’s a “plume of white smoke” as legislators are “getting close” on an agreement on how to pay for core services. On Monday, Governor Spanberger announced a projected $1.5 billion increase in General Fund revenues for Fiscal Years 2026-2028, which some believe could help the General Assembly reach a deal sooner.

Jeff Schapiro, a political analyst with the University of Virginia Center for Politics, says a partial government shutdown would be a “gray area” for the Commonwealth, both politically and legally.

“Were Virginia to conclude this fiscal cycle without a new budget in place, it’s not entirely clear what responsibilities, what powers, what options would be available to the governor to see to it that services continue,” Schapiro said. “There’s a lot of gamesmanship going on now, and I think the Democrats realize that the optics of inaction are very bad.”

Meanwhile, Schapiro says, there’s a chance Democrats could use the budget to pass some of the bills that Governor Spanberger vetoed, including a retail cannabis market.

“Right now, what you’re seeing is a legislature...showing considerable independence and trying to run down the clock in hopes of folding into the budget a number of these measures that may have little to do with spending, or prized by the Democratic base, and to somehow fold those...in the budget,” Schapiro said, “and get that budget to the governor fairly late in this cycle, so that Spanberger would have little if any time to make tweaks, amendments, what have you.”

29News asked Callsen if she would support any efforts to include vetoed legislation in the budget.

“Really the bills that you can legislate through the budget are ones that revolve around revenue or expenses, and so the marijuana retail market might be one that’s in there, because that’s a source of revenue and there’s certainly been a bipartisan push to have a regulated market,” Callsen said. “And then collective bargaining, absolutely, I would love to see that in there.”

McDougle added that, while he wants to see a budget passed as soon as possible, he wants to see one that doesn’t raise any additional taxes on Virginians.

“We just continue to hear, we need more money, we need more money,” McDougle said. “Virginians don’t have more money to give – the state government should live within our means."

The House of Delegates will gavel in on June 18, and the State Senate on June 22. While Bauer says she agrees with the Senate’s desire to axe the exemption, she told 29News that both versions of the budget fail to allocate enough funds to schools to match inflation.

“We really would like to see a budget that meets the moment, a budget that recognizes there are vacancies, recognizes that we want to make sure we’re responding challenges, and making sure that we have the funding to make our schools successful,” Bauer said. “The average Virginian pays their fair share of taxes – we want those data center companies to pay theirs as well."

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