WASHINGTON, March 4, 2026 — Cozen O’Connor Public Strategies, the bipartisan government relations and communications affiliate of international law firm Cozen O’Connor, today announced that Alexandra DeRiso has joined the firm as a principal on its health care team.
Over the weekend, the House Appropriations and Senate Finance and Appropriations Committees released their versions of the biennial budget, which in many ways stand in sharp contrast to Governor Youngkin’s introduced budget from December.
Chairs of both money committees stressed that their amendments aim to promote affordability while maintaining long-term fiscal balance in the face of federal uncertainty. Both versions of the budget make significant investments in K-12 education, backfill anticipated health care cost increases, and include raises for state employees and teachers. Notably, neither budget contains any tax hikes.
The two budgets are not without their own differences. The two versions of the budget will be voted on in each chamber of origin on Thursday, after which conferees will be named and negotiators will reconcile differences before voting on a unified budget that will head to Governor Spanberger’s desk in the next few weeks.
Meanwhile, since the Crossover deadline passed last week, the House and Senate can only consider legislation that has advanced from the opposite chamber.
Reflecting a clear consensus among legislators, both the House and Senate budget proposals avoid any new broad-based taxes.
However, one major difference in the two budgets is the Senate’s proposed repeal of the data-center sales tax exemption on January 1, 2027, which historically has been a major incentive for the sprawling data center industry in Virginia.
Repealing this exemption is expected to generate roughly over $1 billion in additional tax revenue over the biennium, which would allow the Senate budget to fund one-time tax rebates of $100 per individual and $200 per couple and boost the standard deduction to $9,200 for single filers and $18,400 for joint filers. It would also help fund $300 million in transportation upgrades and make one-time investments in water infrastructure.
Opponents of the repeal in the data center tax exemption have warned that repealing the exemption could slow investment and job growth tied to the data-center economy in Virginia, which has been a major economic driver in recent years.
Both money committee budgets prioritize K-12 education funding. While specific figures and policy changes have yet to be fully released, legislators underscored protecting and expanding K-12 direct aid and rebenchmarking costs as core components of the amended budget.
The Senate proposes 3% annual raises for teachers and state employees – an increase over the House’s 2% proposal – and adds more than $627 million in general fund support over the biennium. That includes additional funding for at-risk students and special education, as well as support for school construction through a proposed 1% local option sales tax for renovations, which is subject to approval through local referendums. The Senate budget also sets aside $50 million for a childcare pilot program designed to match employer contributions.
The House likewise makes significant K-12 and early childhood investments. Its proposal includes $400 million in one-time flexible funding for school divisions, $160 million in additional special education support, and $160 million to expand early childhood education, aimed at clearing childcare waitlists for families earning below 85% of the state median income.
Rising Medicaid costs and expiring federal support are driving major health care investments in both budget proposals. Medicaid spending is projected to increase by $3.2 billion in general fund dollars through FY 2028, with 1.8 million Virginians covered by Medicaid and CHIP.
The Senate includes $591.2 million in savings, a $90 million reserve, restoration of prenatal care, and $200 million to offset the loss of enhanced ACA premium tax credits, which, according to Senator Deeds, could otherwise leave up to 100,000 Virginians uninsured.
The House similarly focuses on backfilling federal reductions, proposing $79.1 million to address premium increases, $45 million to restore federal cuts to public health services, more than $211 million for new SNAP cost shares, $11.1 million for sickle cell initiatives, and additional maternal and infant health investments.
The General Assembly is closer than ever to establishing a regulated adult-use cannabis market in Virginia, five years after legalizing possession and home cultivation. Both the House and Senate have passed bills (HB 642 and SB 542) to create the legal retail framework that would allow retail marijuana sales.
Retail sales could begin as early as November 1, 2026 under the House bill, while the Senate version targets a January 1, 2027 start date — with both measures now headed to the opposite chamber for consideration and eventual conference negotiations.
The bills also vary in the amount of tax that a consumer would pay. The Senate version includes an estimated 17 percent tax, while the House version includes a lower rate between 12 and 15 percent depending on the locality. The Senate bill also contemplates folding the Cannabis Control Authority into the Virginia ABC by 2028, a structural change not included in the House version.
After two consecutive vetoes from Governor Youngkin, the legislation’s prospects appear decidedly stronger this year under Governor Spanberger, who has previously expressed support for establishing a retail cannabis market structure in the Commonwealth.
On Friday, Governor Spanberger signed the caboose budget, which funds appropriations through June 30 of this year. The budget includes redistricting provisions and provides $1,500 bonuses for teachers, subject to a required local match.
The April 21 special election, where voters are scheduled to vote on the newly redrawn maps, remains uncertain as litigation continues over the legality of the revised congressional districts outside the standard ten-year cycle.
Each chamber will vote on its budget Thursday, after which conferees will be appointed next week to reconcile differences and finalize a compromise budget for a final vote before sending it to Governor Spanberger in early March for her review and feedback.
With sine die — the final day of the legislative session — set for March 14, legislators face a tight timeline to complete their legislative work.
Lawmakers reshape Youngkin’s final budget with focus on affordability, no new taxes
By Markus Schmidt, Virginia Mercury
General Assembly budget proposals address federal cuts, ending data center incentives
By Elizabeth Beyer, Cardinal News
Virginia lawmakers pass bills to legally buy and sell cannabis
By Eric Kolenich, Richmond Times-Dispatch (7 free articles per month)
Virginia Senate budget ditches data center tax break to create more than $1 billion in revenue
By Michael Martz, Richmond Times-Dispatch (7 free articles per month)
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Cozen O’Connor Public Strategies, an affiliate of the international law firm Cozen O’Connor, is a bipartisan government relations practice representing clients before the federal government and in cities and states throughout the country. With offices in Washington D.C., Richmond, Albany, New York City, Philadelphia, Harrisburg, Chicago, and Santa Monica, the firm’s public strategies professionals offer a full complement of government affairs services, including legislative and executive branch advocacy, policy analysis, assistance with government procurement and funding programs, and crisis management. Its client base spans multiple industries, including healthcare, transportation, hospitality, education, construction, energy, real estate, entertainment, financial services, and insurance.
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March 12, 2026
March 12, 2026
March 12, 2026
