Youngkin sets veto record as energy, AI fuel gridlock

Few observers of the Virginia General Assembly expected any groundbreaking legislation to emerge from this election year session, and for the most part, they were right.

And Gov. Glenn Youngkin certainly did his part to keep that from happening as well. In the last full year of his term, the Republican firmly cemented his record as the Virginia governor with the most vetoes during his term — more than 400 total. This session alone, he killed 158 bills and amended 159 others. He made 205 amendments and eight line-item vetoes to the state’s budget in 2025, although the Democratic-controlled legislature rejected most of those budget revisions.

Among the major headlines this session was Youngkin’s $900 million in spending cuts to maintain a cushion in case of financial repercussions related to President Donald Trump’s federal spending slashes and tariffs. Most of the expenditures cut from the biennial state budget were for one-time capital projects at universities, Youngkin said. Meanwhile, he approved a Democrat-backed plan to issue $1 billion in income tax rebates to eligible Virginians.

Bills Youngkin signed into law this year include the creation of a Virginia sports tourism grant program that will be administered by the Virginia Tourism Authority and a bill requiring Dominion Energy to petition the Virginia State Corporation Commission by Dec. 1 for approval of a pilot program to test “virtual power plants,” a voluntary network of small-scale energy resources like residential solar panels that could supply energy during times of peak demand.

Many of the governor’s vetoes were expected, with Democrat-backed measures like recreational marijuana sales, minimum wage increases and gun control measures dying at the Republican governor’s desk. Less predictably, though, Youngkin vetoed a measure to create a regulatory framework for blockchain-based businesses and instead advocated for a state study of the issue.

He also vetoed a bill that would have let local governments considering data center proposals require developers to conduct site assessments that take into account water sources, parks, historic sites and forest land. He also cut $2.7 million in funding to market Virginia to business developers, saying it isn’t the time to increase discretionary spending.

Explaining his data center veto, Youngkin wrote that the bill “limits local discretion and creates unnecessary red tape. While well-intentioned, the legislation imposes a one-size-fits-all approach on communities that are best positioned to make their own decisions.”

And with a quiet fizzle, so died the final piece of surviving data center legislation in this year’s short GA session, even though data center growth and its impacts are hot topics in localities across the state, no longer just in Northern Virginia. Many proposed data centers face intense public opposition, although county and city governments are often open to courting the projects because they bring in much-needed tax revenue. Some state legislators, meanwhile, have been pushing for more statewide regulations around data centers.

Power gridlock

“Data centers have become the whipping boy for a lot of people, as if every single one of us with our cell phones and our cars and everything else aren’t benefiting from those data centers,” says Greg Habeeb, chair of Gentry Locke’s Government and Regulatory Affairs Practice Group and president of Gentry Locke Consulting. A former Republican state delegate, Habeeb is involved in lobbying for renewable energy interests.

A nationwide discussion about data centers and their potential harms developed after the pandemic shutdown increased reliance on residential broadband access. With the 2022 introduction of ChatGPT opening the floodgates to widespread artificial intelligence use, which consumes massive amounts of energy from data centers, communities in Northern Virginia — already home to the world’s largest concentration of data centers — began to push back against building more.

Although some controversial projects have received approval, including the massive Prince William Digital Gateway, local officials have begun to enact limits on future data center projects, even in Loudoun County’s “Data Center Alley” in Ashburn, which has more than 30 million square feet of data centers in operation.

Data centers provided nearly $900 million in local tax revenue for Loudoun last year, covering nearly the entire operating budget for the county. Nonetheless, in March county supervisors approved new restrictions on building data centers on land close to residential neighborhoods.

“The question really is, ‘Where do those data centers go?’” Habeeb says. “Where are they best suited? What should the tax policy [and] energy policy be around them? I think that will be a massive conversation next session. It’s really become an energy conversation. We’ve got new projections on load growth, and it’s just a reality: We are going to hit a crisis point if demand, if load growth continues at the projected rates.”

PJM, the regional power grid operator serving 65 million customers in 13 states, including Virginia, anticipates “significant growth” in demand for electricity in the next 20 years, according to its 20-year forecast report released in January. It anticipates summer peak demand to increase by 70,000 megawatts to 220,000 megawatts by 2039. Currently, PJM generates about 183,000 megawatts, the study says.

That means if energy use continues to climb, “and we don’t have significant new generation” of electrical power, “that crisis may be in the form of higher electric rates,” Habeeb says. “It might be in the form of blackouts. It might be in the form of a bunch of new generation [facilities] that people don’t want to look at. But the status quo is not going to exist. You can’t keep load growth going the way it is without energy policy being affected substantially.”

Stephen Farnsworth, a political science professor at the University of Mary Washington, says that candidates running for seats this year in the House of Delegates are hearing from voters about the issue of data centers, AI and energy generation.

“Candidates will go to the voters, and the voters have to weigh in … and then we’ll see after the dust settles in November,” Farnsworth says. “I don’t know that you can really see a clear plan on the data center question, right? Different localities are going to feel very differently. In Northern Virginia, there’s enough economic activity that there may not be a lot of pressure to expand data centers, but in other parts of the state, the economy is much more stagnant. There’s going to be a great deal of interest in figuring out a way to bring about economic activity.”

Another energy bill that would have given the state more power over localities in approving solar projects died in session. Solar farms and rural land use is a hot-button issue in parts of Virginia, and many localities have placed caps on utility-grade solar that effectively block many new solar projects.

Meanwhile in Richmond, Democratic lawmakers are concerned that this trend will keep the state from achieving its goal of producing two-thirds of all electricity from solar or wind by 2035, as mandated by the 2020 Virginia Clean Economy Act. They aimed to gain some power over the process via the failed bill.

Supervisors in rural counties and environmental activists banded together to oppose the bill, saying it would undermine localities’ voices in determining land use. Republican legislators, especially those in rural districts, also lined up against the measure.

Despite the controversy, the issue is bound to return in 2026, says Chris Saxman, executive director of Virginia FREE, a nonprofit that provides nonpartisan political information to the state’s business community. A Republican former state delegate, Saxman says interest groups are “looking into if we operate under the notion of local control and local decision-making authority. That’s something that’s still sort of a bedrock principle of Virginia.”

Saxman adds that the VCEA, which was passed before the pandemic and the advent of generative AI, “was written without the knowledge of how expansive data centers were going to be and how much energy they were going to require. And because that changed, it defies sanity that they wouldn’t go back and redo the math on VCEA. But in a political context, you can’t ‘because it’s weakening the laws.’ No, it’s just updating to reality. No one wants to do that in this country anymore.”

Up in the air

Habeeb, Saxman and Farnsworth agree that most questions about 2026 legislation will come down to this fall’s elections, which will determine political control of the House of Delegates and who will be the next governor, lieutenant governor and attorney general.

As of June, polling placed former U.S. Rep. Abigail Spanberger, the Democratic nominee, ahead of GOP candidate Lt. Gov. Winsome Earle-Sears, but Habeeb cautions that it’s still early days and that at this point in the 2021 gubernatorial campaign, “very few [people] had heard of Glenn Youngkin.”

If Democrats maintain control of the House and Spanberger wins, expect to see many of the bills vetoed by Youngkin to return in 2026, Farnsworth says, along with others that died in the legislature. And if Earle-Sears prevails, expect to see a continuation of many of Youngkin’s priorities, although she would still face opposition from the Democratic-controlled state Senate, Habeeb says.

Regulation of retail sales of cannabis, changes to Virginia’s right-to-work laws and a minimum wage bump to $15 an hour are all Democratic priorities that would likely come up if the party sweeps this fall’s elections.

A Fairfax County casino bill that failed in 2024 and 2025 may make a return to the legislature as well, even with major local opposition to a casino. Previous bills have received some bipartisan support because the legislation gives Fairfax residents the opportunity to vote on a referendum and settle the issue for themselves. Sen. David Marsden, the 2024 bill’s chief patron, said on a radio show in May that he thinks a casino bill could pass the legislature in 2026.

In a few cases, the outcome of the lieutenant governor race could be significant, as the Virginia State Senate is narrowly controlled by Democrats with a 21-19 majority, and the LG’s tiebreaker vote occasionally determines a bill’s fate.

In a bit of political theater this session, Democrats forced Earle-Sears to take a tiebreaking vote on a bill guaranteeing a woman’s right to access contraceptives, and the lieutenant governor voted to kill the measure — a decision Virginia Democrats have brought up multiple times this campaign season to highlight her conservative social views.

Partisan games are par for the course, Saxman says, and as a result, the commonwealth suffers, he thinks. “Things have gotten so hyperpartisan politically over the years that the nuts and bolts … of business, what attracts investment, what maintains investment … is not second nature anymore,” he says. “We’re not attracting businesspeople to the legislature. People are graduating from college and going into politics and working on campaigns and have no working knowledge of the economy or business.”

In the end, he says, there is a “fundamental lack” of knowledge among state legislators needed to pass effective bills, especially from a business standpoint.

“There are bills that are put in that are just stupid and political in nature and are harmful to business,” Saxman adds, “and they’re very difficult to combat once you get into that partisan lane.”