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From Speaker Don Scott:

And from State Senator Louise Lucas:

Note language change - the tax exemption is now a TAX CREDIT.

House Leaders to have press conference at 11am this morning on their budget proposal.

Here is the House Appropriations Committee budget proposal on Data Centers:

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Topics:

1. Budget - White smoke is no joke

2. Virginia Tech DRAMA continues - off to court we go!

3. 2029 Previews - Will it be Gov. Youngkin 2.0 vs Speaker Don Scott?

4. But first - what about 2027 Spanberger Midterms?

5. But before that? Oh yeah! Trump 2.0 the ‘26 Midterms

Top Three Summer Songs

(according to Rolling Stone Magazine)

1. Chic - Good Times (yes, I had that album!)

2. Martha and the Vandellas! Dancing in the Street

3. Marvin Gaye - Got To Give It Up!

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According to sources close the negotiations, Senate Finance and Appropriations Chair Louise Lucas and House Appropriations Chair Luke Torian are meeting today in order to begin the final phase of the Biennial Budget.

First things first

They have to agree how much money the Commonwealth will take in and then decide on how to allocate it over the next two years beginning July 1st.

Governor Abigail Spanberger announced that the updated forecast that she called for will yield an additional $922mm for the biennium. RTD Article here

Over at Cardinal News comes this headline: Virginia is on track to post two straight years of job losses. It’s not just federal job cutbacks that are pulling the state’s economy down. Even if there had been no federal job cuts, the state would have still lost jobs, according to federal economic data. Here’s why.

And there was this article (good reporting by Dave Ress btw) Virginia headed for small recession, Weldon Cooper forecast says

In speaking with people familiar with the protracted budget negotiations, the two chambers have never been THAT far apart but the new revenue forecast presents problems for decision making.

Yes, it’s always better to bring in more money but…

1. Will it be there? #JobLossesAndSmallRecession

2. Is it one time money?

3. Will it raise the base budget?

Regardless, the House will reconvene on the 18th and the Senate on the 22nd to finish their tasks.

The Biennial Budget will then go to Governor Spanberger for her consideration.

Given the short amount of time remaining for passage before a shutdown (no that was never going to happen) and given the even shorter tempers around Capitol Square, the final product should be - to say the least - interesting.

Songs with Ends:

This is the end
Hold your breath and count to ten
Feel the Earth move and then
Hear my heart burst again
For this is the end
I’ve drowned and dreamt this moment
So overdue, I owe them
Swept away, I’m stolen

Let the sky fall
When it crumbles
We will stand tall
Face it all together
Let the sky fall
When it crumbles
We will stand tall
Face it all together
At Skyfall
At Skyfall

This is the end
Beautiful friend
This is the end
My only friend, the end

Of our elaborate plans, the end
Of everything that stands, the end
No safety or surprise, the end
I'll never look into your eyes again

Can you picture what will be?
So limitless and free
Desperately in need
Of some stranger's hand
In a desperate land

BUT WAIT!

ONE MORE TIME! Every year since 1619 - LET’S GOOOO!!!

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Weekly Zoom returns today at 11:00am

Click here to join: https://us02web.zoom.us/meeting/register/gpDZdw9wQ_CsNUU4u8Korw

Topics:

1. Virginia Budget Impasse

2. Spanberger and GA Democrats

3. Rocovich fired from Va Tech Board

4. Preview Congressional Races - Old Maps are back

5. US Senate Races - Gas Prices not the only thing hurting GOP

My Intersection column from yesterday:

Texas GOP Senate Nomination - Time and Money Wasted

FRIDAY!

Former Starbucks CEO Howard Schultz opens his Wall Street Journal op-ed by celebrating Washington state’s extraordinary economic rise — built over half a century by Microsoft, Amazon, Costco, and Starbucks into a global hub of technology, innovation, and logistics.

That era succeeded, he argues, because civic leaders understood private enterprise and the public good as partners, not enemies.

That compact is now broken.

Schultz catalogs Seattle’s visible decay: chronic homelessness, persistent budget deficits, declining public safety, falling foot traffic, slower tech hiring, and widening downtown vacancies.

He singles out Mayor Katie Wilson for treating employers as political foils rather than partners, vilifying the very businesses whose tax revenue funds city government. Starbucks has already responded — laying off 61 more Seattle workers on the same day the op-ed published, while pressing forward with a Nashville office slated to employ up to 2,000 people over five years.

Schultz is easy to dismiss as a billionaire protecting his tax bill.

He did, after all, sell the Seattle SuperSonics to an out-of-town buyer after calling the franchise a “public trust,” and he relocated to Florida after Washington passed its millionaires income tax.

But the SuperSonics episode is more than a character footnote — it is the opening chapter of the very story he is now warning about.

Seattle lost its NBA team because government and ownership could not make a deal on a new arena. Schultz moved on. The team moved on.

Sound familiar?

That is where the story stops being just about Seattle. Former Democratic Governor Christine Gregoire recently told the Association of Washington Business something her party rarely hears from one of its own:

I would suggest to you we don’t really have an income problem, we have a spending problem.

The state budget has ballooned from $33 billion when she left office to nearly $80 billion today — yet lawmakers still insist they need more revenue. Her sharper indictment was cultural: too few legislators have ever run a business, and it shows.

We’re answering it by stacking one more tax, one more rule, one more regulation…The one thing businesses don’t need is a lack of predictability.

Schultz adds:

The theory appears to be that prosperity can be mandated through redistribution rather than generated through growth.

Politicians in Richmond should read all of this carefully — because the same pattern is taking shape in Virginia.

With unified Democratic control of the governorship and General Assembly for the first time in years, the 2026 legislative session has produced a cascade of new employer costs and policy instability that, taken together, tells a troubling story.

Democrats advanced two sweeping workplace mandates — a state-run paid family and medical leave program funded by a new payroll tax, and a statewide paid sick leave requirement — that analysts say will ultimately show up as lower wages, fewer hours, slower hiring, and higher prices for Virginia consumers.

The session also brought proposals to repeal Virginia’s long-standing right-to-work law, restrict non-compete agreements, regulate employer use of AI in hiring, and phase in a $15 minimum wage — representing what employment lawyers called the most significant potential overhaul of Virginia workplace law in decades.

The highest-stakes fight, however, has been over the data center industry — the single largest engine of Northern Virginia’s economy.

Senate Democrats have moved to eliminate a $1.9 billion annual tax exemption that has made Virginia the data center capital of the world, an industry responsible for 74,000 jobs, $5.5 billion in labor income, and more than $9 billion in annual GDP.

Governor Abigail Spanberger and House Democrats resisted, warning that eliminating the exemption would damage Virginia’s business-friendly reputation and breach commitments the state had already made to the industry.

The impasse sent an unmistakable signal to every company considering Virginia for its next major investment: the rules can change, and political priorities can override contractual expectations.

Then there is the arena.

Remember the Monumental Deal?

Governor Glenn Youngkin negotiated a deal to relocate the Washington Wizards and Capitals to Alexandria’s Potomac Yard — two major franchises, a corporate anchor, thousands of construction and hospitality jobs, and national attention for the Commonwealth.

The Democratic-controlled Senate killed it.

Concerns about public bonds and taxpayer risk were legitimate.

But when scrutiny hardens into partisan denial of a governor’s win, the Commonwealth’s pro-business brand absorbs the damage regardless of the merits.

This is the Schultz/Sonics lesson applied to Virginia: at a time when other states are cutting taxes and lowering barriers to growth, Virginia Democrats are moving in the opposite direction — increasing the cost of employment, threatening the incentives that built a dominant industry, and blocking a marquee economic-development opportunity.

No single item breaks the Commonwealth.

But as Gregoire warned about Washington: it is the cumulative signal that matters.

Employers, investors, and franchises do not wait for a final straw.

They read the trend line — and they go where they are wanted.

Key Takeaways

• Schultz’s core warning: Seattle’s anti-business drift cost it Starbucks jobs; Nashville wins when Seattle alienates employers.

• The Sonics precedent: Civic and economic assets, once lost to politics, rarely return — the same lesson applies to arenas, headquarters, and industries.

• Gregoire breaks ranks: A prominent Democratic former governor says Washington has a spending problem, not a revenue problem, and that Olympia’s culture of dismissing business is driving decline.

• Virginia’s labor cost surge: Paid leave mandates, a payroll tax, minimum wage increases, right-to-work repeal efforts, and AI hiring regulations represent the most sweeping employer cost increases Virginia has seen in decades.

• Data center fight signals instability: Senate Democrats’ push to eliminate a $1.9B tax exemption — mid-contract — has stalled the state budget and rattled the industry that anchors Northern Virginia’s economy.

• The arena casualty: The Wizards-Capitals deal was a concrete economic-development win blocked by partisan Senate politics; D.C. kept its teams, Virginia kept the debate.

• The bottom line: Schultz’s warning applies equally to Richmond — do not assume companies, franchises, capital, or talent are captive. They go where they are wanted, and competing states are paying close attention.

Great lyrics by Peter Gabriel explain his decision to leave the band Genesis and strike out on his own in Solsbury Hill help make the point.

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Climbing up on Solsbury Hill
I could see the city light
Wind was blowing, time stood still
Eagle flew out of the night

He was something to observe
Came in close, I heard a voice
Standing, stretching every nerve
I had to listen, had no choice

I did not believe the information
Just had to trust imagination
My heart going, “Boom-boom-boom”
“Son, “ he said
“Grab your things, I’ve come to take you home”
Hey, back home

To keep in silence I resigned
My friends would think I was a nut
Turning water into wine
Open doors would soon be shut

So I went from day to day
Though my life was in a rut
‘Til I thought of what I’d say
Which connection I should cut

I was feeling part of the scenery
I walked right out of the machinery
My heart going, “Boom-boom-boom”
“Hey, “ he said
“Grab your things, I’ve come to take you home”
Hey, back home

When illusion spin her net
I’m never where I wanna be
And liberty, she pirouette
When I think that I am free

Watched by empty silhouettes
Who close their eyes but still can see
No one taught them etiquette
I will show another me

Today, I don’t need a replacement
I’ll tell them what the smile on my face meant
My heart going, “Boom-boom-boom”
“Hey, “ I said
“You can keep my things, they’ve come to take me home”

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Register here: https://us02web.zoom.us/meeting/register/l926rEuaRX-R6q_ID8kzJQ

Topics:

1. Budget - We have a number!

2. How do we get TO that number?

3. Collective Bargaining Bill and others

4. Gerrymandering Amendment - SCOVA up next

5. 2027 Cycle - Look ahead based on Constitutional Amendment turnout

6. Cardinal News breaks down GOP Mail In Ballot operation:

GOP strategists video released:

“Should we develop a Mail In Ballot program?”

May 1, 2006 Top Song in America

May 1, 1976 Top Song in America

Top Song May 1, 1966

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Topics:

1. Tuesday’s Election - Is Virginia 10-1 or 8-3?

2. Virginia Supreme Court up next

3. Reconvene Session - General Assembly vs Governor

4. To Veto or Not to Veto - that is the question

5. Collective Bargaining

6. Marijuana Legislation

7. Data Centers

8. Should States regulate AI?

   

   Is Virginia 8-3 now or 10-1?

   

   Virginia is DEFINITELY D+3

   

   ON HOLD VIDEOS

   #1 Song April 1986

   #1 Song April 1976

#1 Song April 1996

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Virginia might not be 10-1 after all.

(Note the Virginia Tech mention - Go Hokies, your first national title will happen some day - Soil Testing and Bass Fishing notwithstanding)

Check out this - very early - data via X.com. This has not been verified yet.

With higher than expected turnout in the rural areas Virginia might have voted 8-3 vs. 10-1.

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again - pending verification. Yes, I am saying that twice!

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<End Scene>

The morning after any election, there’s a temptation to over read/think/feel the results.

Winners claim mandate.

Losers demand autopsy.

Both usually miss what’s staring them in the face.

What the numbers plainly say:

Virginia is a D+3 state and it performed D+3.

The analysis ends there.

Elections have three main elements:

1. Environment

2. Money

3. Candidate Quality

For this election 1 and 2 (environment and $) were clearly on the side of the Democrats in a D+3 state. Candidate Quality was a lone ballot question, so let’s call that a push.

Environmental Swings:

2008 - Democrat (Obama) wins Virginia 53-46 (+7)

2009 - Republican (McDonnell) wins Virginia 58-41(+17)

Swing - 24 points

2012 - Obama II - wins 51-47 (+4)

2013 - McAuliffe wins 47.75 to 45.2 (+2.5), but 6.5 points for Libertarian

Swing winnable for GOP - government shutdown and Obamacare website crash

2016 - Trump wins nationally; loses Virginia 49.75 - 44.4 to Hillary! (+5)

2017 - Northam wins 54-45 (+9)

More Dems +4

2020 - Biden wins nationally and Virginia 54-44 (+10)

2021 - Youngkin wins 50.5 - 48.6

Swing +12

2024 - Trump wins nationally; loses Virginia 51.8 - 46 (+5)

2025 - Spanberger wins 57-42 (+15)

More Dem +10

2026 - Democrats win 51.5-48.5 (+3)

Net from 2024?

GOP +2

What every serious observer should consider — Republican, Democrat, or neither — is what structural D+3 actually means for governance.

In the last decade, 31 House of Delegates seats have flipped from Republican to Democrat. Thirty-one.

That’s not a trend.

That’s a realignment, driven almost entirely by the advent of Donald Trump as a defining force in Virginia’s political culture. Suburban Virginia’s antipathy toward him is not shallow. It is intense, personal, and durable.

Republicans can be angry about that. Fine.

But here’s the honest question I’d put back to a Republican audience: would you prefer a Democratic president?

Because in Virginia, that’s the condition under which Republicans win back those seats and possibly the Executive Mansion.

That’s not spin — that’s just how this state has historically functioned. GOPeople haven’t adjusted their sails to that reality, and it shows.

On the ballot question itself, Republicans had a winnable argument. Polling I was involved with back in February showed a message that could move voters — specifically, using Abigail Spanberger’s own words from 2019 to persuade her coalition to stay home or reconsider.

Opponents of the ballot question didn’t deploy that message early enough, and they were massively outspent. Again.

When Youngkin and McAuliffe were on financial par, Youngkin prevailed. That’s not coincidence. Outspending your opponent by a lot, not a little, matters.

Yes, money matters.

Let’s pull back even further, because we need perspective.

People across the country were locked into a Virginia ballot question while the nation’s debt will cross $40 trillion in debt later this summer.

Nobody wants to talk about that.

We’re arguing about redistricting while mandatory entitlement spending threatens to swallow the federal budget whole. At some point, we owe future generations a reckoning with that — not another cycle of electoral theater.

What I found encouraging, oddly enough, is that the Madisonian system is still working.

The guardrails are being tested, but they’re holding. The people voted. Courts may still weigh in. Candidates will file. Campaigns will be run.

It’s messy, contentious, and sometimes dangerous — but it’s functioning.

Virginia is who we thought we were.

Closely divided, deeply divided, and still, somehow, deciding things together.

And without violence.

That’s the democratic republic our founders created.

That’s worth protecting — even when your side loses.

Rinse and repeat - thank, God.

Big Surprise!

That is where Virginia is according to the Cook Partisan Voting Index.

It was a deeply partisan question put to the voters and they responded accordingly.

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Zoom today at 10am to discuss Special Election and today’s Reconvene Session.

Register here: https://us02web.zoom.us/meeting/register/LANOWTIiSDeNzgoR-3ESaQ

NYTimes

VPAP

Cook Partisan Voting Index

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Zoom today at 10am to discuss this and Reconvene Session

Register here: https://us02web.zoom.us/meeting/register/LANOWTIiSDeNzgoR-3ESaQ

Graphics via VPAP (please consider donating to them)

NOVA Big Five

(These Five produced a 420,000 +/- raw vote margin for Governor Abigail Spanberger in the fall - hence the moniker Big = Big Margin)

Fairfax Down

Loudoun Down

Prince William Down

Arlington Down

Alexandria Down

Rurals

Rockingham Up

Lee Up

Scott Up

Henry Up

Cities

Richmond Down

Portsmouth Up slightly

Norfolk Down slightly

Virginia Beach Down

Analysis

This is going to be close and the No Campaigns (yes, plural) might very well pull this off.

The drop off in Democratic strongholds is based off of the historic BLOWOUT +15 point margin back in November.

Two key metrics:

1 - Democrats and Independents who voted for Spanberger either didn’t vote or voted No.

2 - Republican turnout could EXCEED the gubernatorial race.

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THREE Days this week at 10am Monday Tuesday Wednesday.

REGISTER ONCE for ALL THREE!

Link: https://us02web.zoom.us/meeting/register/LANOWTIiSDeNzgoR-3ESaQ

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Come Monday - Jimmy Buffett

Tuesday Afternoon - Moody Blues

Working for the Weekend - Loverboy

In politics, timing is everything.

Timing also matters when it comes to the economy.

Virginia is approaching a pivotal moment in its economic strategy—and it is happening at exactly the wrong time.

Valuation Trend:

As global markets reassess the value of technology companies, one thing is becoming clear: the era of easy capital is over.

Investors are demanding discipline.

Massive spending on AI infrastructure—data centers, energy, and computing power—is now under scrutiny. In that environment, where companies choose to invest matters more than ever.

Three Engines of Growth

That is why Virginia’s debate over ending the data center sales and use tax exemption carries outsized risk.

For years, Virginia has built a quiet but powerful advantage.

It is home to the largest concentration of data centers in the world, anchored by Northern Virginia but extending economic benefits across the Commonwealth.

This is not just a tech story—it is a jobs, construction, energy, and local revenue story. Billions in investment have flowed into Virginia because the state offered something rare: predictability.

Predictability is a competitive advantage of Virginia. Why? Others don’t have it.

What do markets HATE? Uncertainty.

The sales and use tax exemption is often misunderstood. It is not a line-item expenditure in the state budget, nor is it a cash outlay.

It is a policy tool designed to attract capital-intensive investment that might otherwise go elsewhere. Increasingly, “elsewhere” is becoming more competitive.

Ending that exemption now—amid a broader political environment that appears skeptical of data centers—risks sending a clear message to investors: Virginia is no longer a stable place to deploy large-scale capital.

That signal matters.

When valuations fall and capital tightens, companies do not expand everywhere—they become selective. Projects get delayed. Locations are reconsidered. Once lost, those investments rarely come back.

The consequences would not be abstract. Local governments that have come to rely on data center-driven property tax revenues could face shortfalls.

Construction jobs tied to new facilities could decline. Supply chains that support these projects—from electrical contractors to equipment providers—would feel the slowdown.

Over time, Virginia could see reduced economic growth, even as policymakers pursue short-term revenue gains.

There is also a deeper irony.

Policymakers seeking to raise revenue by ending the exemption may ultimately shrink the very tax base they depend on.

Fewer projects mean less property tax, less income tax from workers, and less economic activity overall.

None of this is to dismiss legitimate concerns about land use, energy demand, or community impact. Those issues deserve thoughtful solutions.

We should have those conversations without disrupting what’s working.

Policy instability; however, is not a solution—it is a risk multiplier.

Virginia’s competitive edge has never been accidental. It has been built over time through consistency, infrastructure, and a reputation for getting big decisions right.

At a moment when the global tech economy is recalibrating, Virginia should be reinforcing that reputation—not testing it.

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This is shaping up to be one of the most consequential policy moments in Virginia—and beyond.

Join Virginia FREE at 10 AM as we break down Governor Spanberger’s big weekend: pragmatic, centrist leadership or something else?

We’ll examine the Fairfax casino veto and override odds, collective bargaining, paid family leave, and the high-stakes debate over data center tax policy.

Plus, the gerrymandering referendum and the war in Iran.

These decisions will shape costs, competitiveness, reputational damage, and political power.

Join us!

Click here to register: https://us02web.zoom.us/meeting/register/jxv-zgHmSVuP0xrUB5t2bA

Today’s Topics:

1. Governor Spanberger’s Big Weekend - Pragmatic Centrist or Not?

2. Fairfax Casino Referendum - Vetoed, but will it be overridden? Plausible, Possible, or Probable?

3. Collective Bargaining for State and Local Employees

4. Paid Family Medical Leave

5. Data Center Sales and Use Tax Exemption

6. Gerrymandering Referendum

7. Iran War - Strait of Hormuz tolling?

8. And is Trump coming to Charlottesville?

On Pitching Inside:

And it’s FRIDAY in APRIL!

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Worst thing you have ever done to me

I couldn’t argue with William.

He was a full grown man who would soon turn 30, so I had to sit with his truth.

It weighed on me.

A gainfully employed, college degreed homeowner who married his high school sweetheart, William has always been a thinker.

Of all the ball players I coached over the years in many sports, William was far and away the most coachable kid.

He was the “Glue Guy” on our teams - the one player who kept the team together in tough times and grounded in good times. Not the best athlete, but the best chemistry kid.

I don’t say that as his dad, that’s what other players, coaches, and parents reflected back to me. Over time, I came to see it as well.

So, that text stung.

Unlike most parenting decisions, in this circumstance, I had had no choice.

Call it fate…call it karma…call it genetics…call it an accident of birth…

Whether William liked it or not, we are Pittsburgh Pirates fans.

Ouch.

Whereas I was raised in glory days of Pirate greatness - Roberto Clemente, Willie Stargell, two World Series wins over BALTIMORE (that never gets old to say), and being at the top of the division annually, William has seen few winning if even competitive seasons.

He has never seen the Pirates win a division. Ever. The kid is almost 30!

The July trade deadline has become an annual Anti Christmas.

Christmas in July? uhhh…NO.

More like when Charlie Brown got a rock for Halloween

A ritual so bereft of hope that the mere mention of a Single A prospect with “upside” induced not only nausea but on one occasion (yes the Chris Archer trade in 2018) literal vomit.

August 1, 2025 was the day AFTER another miserable trade deadline in which the Pirates dealt away - again - veterans for MORE “prospects with upside.”

On this particular Misery Day +1, the Pirates scored nine runs in the first inning.

It was against the WORST team in baseball, the Colorado Rockies, but maybe the remaining Battling Buccos were saying to the baseball gods that we will “not go gentle into that good night.” (yes, Dylan Thomas, Charlie Brown, and Willy Wonka - you’re welcome)

REVENGE!

We will gather our best selves and take on our foes hoping to Raise the Jolly Roger over Denver!

9-0 in the very FIRST inning!

We lost 17-16.

To the worst team.

A team that would lose 119 times.

Worst thing you have ever done to me

William’s also very funny.

Readers of my columns have expressed their genuine appreciation of my pop cultural references over the years along with accompanying videos that hopefully help make the point I am trying to convey.

Now I’m going to ask for your indulgence, patience, and understanding as I pivot to baseball.

Why baseball?

Well, it’s similar to politics and deeply woven into our American fabric.

Also - not partisan.

When I saw the Washington Post poll that came out earlier this week about the Approval/Disapproval ratings for Governor Abigail Spanberger, I quickly dove into the other questions provided.

But the top line had to sting 47-46 just 5 months after trouncing Winsome Earle-Sears 58-42.

Analysis - intensity working against her

The Top Issue from her campaign?

Affordability.

Analysis - not making the sale on HER #1 priority down 31-64. Ouch.

Why?

One reason - Gerrymandering has been the dominant issue and it has NOTHING to do with Affordability:

Analysis - not in line with where her campaign was or where Virginia is.

To make matters worse, WAPO’s poll was +7 with women, college degrees at 47, and Democrats +6 while Spanberger was 47-46 or +1.

Most of the narrative problems Spanberger is facing is not of her making, but in politics and baseball you don’t get to choose the pitches you face, only the pitches you throw.

Last night, the Governor threw out the first pitch to open up the LONG awaited new Car Max Park stadium home of the Richmond Flying Squirrels - AA team of the San Francisco Giants. It’s a great new ball park - recommend highly.

Traffic prevented William, his younger brother, John, and me from seeing the ceremonial first pitch. Social media told me it was not on the mark…

But that’s not the point of ceremony.

She’s been in office less than 80 days - it’s still the first inning.

Everyone can take a breath; however, Spanberger’s actions on many important bills over the next week will determine a lot.

The ceremonies are over and the Governor has been throwing off the plate early in the game missing the strike zone.

Spanberger needs to weigh in by Pitching In.

She’s needs to move some legislators and members of her own party off the plate - that’s where the battle is fought.

They’ve been crowding the plate.

In baseball, if the batter is crowding the plate and the pitcher does NOT pitch inside, the batters get more leverage. Things only get worse for the pitcher’s team.

This pitcher’s problem is that both teams are hers.

The good thing for Spanberger is that politics, unlike baseball, is not a team sport.

It’s okay to pitch inside.

If she doesn’t, it could be the worse thing for her team.

Irony noted.

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Video lesson to make the point ?

Bob Gibson

Pete Rose on Bob Gibson:

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Q - Is Virginia Ready for a Recession?

Let’s look at some macro level stuff first.

US government debt at 9am this morning:

About 1/3 of which is maturing soon:

That’s $10trn of US government debt, right?

That will be refinanced at HIGHER rates.

Add in $2trn more from this year’s deficit. That’s $12trn.

Plus another $2trn in corporate debt. That’s $14trn.

$14trn this year.

Torsten Slok at Apollo:

The bottom line is that the growing supply of investment grade fixed income product is putting upward pressure on rates and credit spreads.

So higher borrowing rates likely.

And then…

The Ol’ Hormuz Hose Crimp

So how is Virginia prepped for a possible recession later this year?

Many believe that Virginia already would be in a recession were it not for the growth of Data Centers.

Well…here’s the good news albeit from last year:

CNBC Top States for Business Ranking 2025

Structurally, Virginia is sound - according to CNBC.

Too reliant on the federal government, in my honest opinion.

We are who we are.

Recently Weldon Cooper Center at UVA estimated we will lose over 10,000 jobs in 2026.

Cardinal News: Northern Virginia and Hampton Roads have lost more jobs than any other metro area with more than 1 million people Two new economic reports paint a pessimistic picture for the Virginia economy, particularly its two biggest regional economies. They matter to rural Virginia because that’s where much of our school funding comes from.

One of our top areas of performance is in Infrastructure.

CNBC Infrastructure Ranking

Virginia #2

But here is where the CNBC ranking gets a little partisan: Quality of Life.

CNBC Quality of Life Ranking Bottom Ten

From their website on Methodology

Which States People are Moving To:

Enter a long drawn-out budget battle now delayed for the gerrymandering ballot question.

Sources in the negotiations of ending the Data Center exemption to fill the $2Billion funding gap between the House/Governor and the Senate tell me there is no end in sight.

There are literally dozens of Data Center business models in play that have been built on the Sales and Use Tax exemption lasting until 2035.

The question being begged here is this:

Is anyone paying attention to the Big Picture?

Doesn’t seem that way.

Enjoy the music break!

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Two simple analogies bring this into focus: the neighborhood Happy Hour and the timeless scene of Lucy pulling the football away from Charlie Brown.

Happy Hour

Imagine a restaurant or bar advertising a daily happy hour—discounted drinks, lower prices on food - a clear incentive to come in and spend money.

Customers respond accordingly.

They change behavior, make plans, and spend money based on that expectation.

Now imagine the owner abruptly cancels Happy Hour halfway through the week—or worse, changes the rules after customers have already ordered.

Price or Predictability?

Both. But which one changes behavior more?

Predictability.

It’s one thing when a business changes prices, that happens all the time. It’s a perilous decision for sure as the business waits for the customer verdict.

Now, consider changing the price after customers have ordered and the food is being delivered.

<Restaurant Scene>

Server:

Oh, since you placed your order the owner lost money gambling on his new Casino Phone and he’s told us all to drop the Happy Hour prices, okay?

Customer:

Not okay. In fact, we’re not going to pay and you can keep your food and drinks, we’re leaving. AND we’re going to tell everyone one about it. Congratulations, you’re about to go viral.

Cue refrain from Alanis Morissette’s “You Outta Know”

Customers exit and pull out their Smart Phone (sans casinos) each taking turns posting their outrage du jour.

(Thanks, Dave)

<end scene>

Not a successful business model, right?

Data Centers

Data center investment works the same way, just at a much larger scale.

Virginia created an incentive structure designed to attract billions of dollars in long-term infrastructure investment.

It worked.

Actually - present progressive, not past tense - the incentive IS working.

(Yes, present progressive tense is ironic, but let’s focus here.)

Companies responded by building, financing, and committing to the Commonwealth based on those rules.

Those rules include the Sales and Use Taxes which factor into the business models on which decisions are made to finance.

The private sector can’t print its own money, it has to borrow it and have it in the bank in order to purchase the equipment and secure labor contracts.

These are not short-term decisions; they are multi-decade capital allocations involving complex financing models built on predictable cost assumptions.

Now consider the Lucy analogy.

AUGH!

Each time Charlie Brown lines up to kick the football, he trusts that Lucy will hold it in place. And each time, she pulls it away at the last second.

Eventually, the lesson isn’t about the missed kick—it’s about the expectation that the rules will change just when it matters most.

If Virginia changes its policy ahead of schedule, it risks becoming Lucy in the eyes of capital markets.

The current discussion has ALREADY hurt Virginia’s reputation as a reliable, predictable, and safe place to invest.

Repricing

The consequence is not immediate collapse, but repricing.

Investors begin to assume that incentives in Virginia are not durable.

Lenders demand higher interest rates because the RISK is higher.

Equity investors require higher returns. These can and do include public employee pension programs.

Projects that once penciled out no longer do. And perhaps most importantly, future investment starts to flow elsewhere—to jurisdictions where the football is more likely to stay in place.

Just as customers abandon a restaurant that plays games with its pricing, capital avoids markets that introduce uncertainty into long-term commitments.

The loss is not just the tax exemption—it is the erosion of Virginia’s reputation as a reliable partner.

In the end, the lesson is simple: incentives attract investment, but consistency sustains it.

Once a state signals that the terms of the deal can change midstream, every future deal carries a premium for that risk.

And like Charlie Brown, investors eventually stop running up to kick.

These next four weeks will be some of the most consequential in determining the next generation here in the Commonwealth.

Lewis Capaldi - Someone You Loved:

Hey, that’s just The Way It Is:

Speaking of Lucy…

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1. Gerrymandering Update - anecdotes are not DATA

2. Exemptions - Data Centers, Collective Bargaining, Paid Family Medical Leave

3. Expected Job Losses

4. $4 gallon for gas

The Virginia Senate’s proposal to eliminate the sales and use tax exemption for data center equipment raises significant questions about the Commonwealth’s long‑term economic competitiveness and pro-business reputation as a stable place to invest.

The exemption, originally created to attract large‑scale digital infrastructure investment, helped Virginia become the largest data‑center hub in the world, anchoring cloud computing, artificial intelligence, and global internet traffic.

Ending the incentive earlier than expected could slow or end new data‑center development by introducing policy uncertainty.

These facilities require billions of dollars in upfront investment and long planning horizons.

If Virginia signals that major economic development incentives can be changed midstream, companies evaluating new projects may reconsider where to locate future facilities.

The reputational implications extend well beyond the technology sector.

Virginia has recently attracted more than $12 billion in pharmaceutical manufacturing investments, positioning the state as an emerging life‑sciences hub.

Major projects include:

• Eli Lilly announcing a $5 billion manufacturing facility in Goochland County expected to create about 650 permanent jobs and roughly 1,800 construction jobs.

• AstraZeneca developing a $4.5 billion biopharmaceutical manufacturing hub in Albemarle County focused on advanced medicines including cancer and metabolic therapies.

• Merck expanding its pharmaceutical manufacturing presence in the Shenandoah Valley with a multibillion‑dollar facility.

These investments were influenced by Virginia’s reputation for policy stability, workforce quality, and a pro‑business climate.

If Virginia even appears willing to reverse economic incentives after companies commit billions of dollars, it risks undermining that reputation.

Pharmaceutical manufacturers currently evaluating U.S. expansion sites—particularly for complex biologics and advanced drug manufacturing—closely monitor how states treat existing investors.

In a global competition for capital, predictability is often as important as tax policy itself.

The debate over the data‑center exemption is therefore not only about one industry—it is about whether Virginia continues to signal long‑term reliability to the advanced industries it is trying to attract.

It’s one thing to have a rational policy discussion in order to evaluate the efficacy of previous decisions. That’s natural, healthy, and usually productive.

It’s quite another to have a knock down drag out, hostage taking political debate over an industry that has invested TENS of BILLIONS in Virginia out on social media that requires a special - and unnecessary - legislative session.

This ain’t funny - it’s damaging.

The business world is watching this debate and others taking place in other states/cities.

Trust me when I tell you this - if you think politics moves fast, business moves MUCH faster and they run to predictable, reliable markets.

They have enough problems competing in the global marketplace for human and financial capital, they literally don’t have time for these things.

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Maybe they could relocate to Georgia.

From the Eat a Peach album a TWOFER!

10:00am today

Click HERE

Topics:

1. ODU Shooting

2. Gerrymandering Update - GOP raising $ and that mailer….oy.

3. General Assembly going to Overtime - no budget

4. RTD Headline - Va. revenue growing more slowly with new budget still a work in progress (no link - it’s too much of a pain to log on to that site)

5. iGaming and Gaming Commission

6. Data Centers Tax Exemption

7. Medical Malpractice

8. Paid Family Medical Leave

9. The Intersection headline - Political Prop Bet - Trump declares National Emergency for Alaskan Energy

March Madness Bracketology:

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There are two kinds of hunts - the first involves participating in what’s known as the Harvest. That begins the first Wednesday after Labor Day. If you’ve ever seen the TV show Swamp People - that’s what we do.

Wait, what?! Isn’t that dangerous?

Not really.

But there used to be real money involved. When we started out, gators were fetching about $30 a foot. Kill a 10 footer and that’s $300 without much more than a .22 round, a chicken quarter (bait hung from a tree), and gas for the boat. Times over 60 tags - that’s real money for a week of work.

And it’s work. Like work, work. Dead gators are heavy. Whilst in a jon boat with half a dozen other very dead alligators in a quickly warming south Louisiana morning on the bayou?

Smelly. Wear boots.

Prices have come down due to commercial farming, so now it’s mainly a nuisance Harvest in which the goal is keeping the population in check.

What’s the other kind?

Grabbing. We go out at night and grab them by the back of the neck.

This is exponentially more dangerous and profoundly stupid. It’s also not sober, so…

We go out at night with two spotlights, spot gators, and try to come up behind and grab them by the back of the neck.

And then what?

Well, we pull them into the boat, take pictures, and toss them back.

And this is fun?

Hilarious.

We take the kids out, too. They love it.

AND THE MOTHER’S???

Not thrilled.

One night, I called Michele to tell her I caught a five footer.

Her reply?

“Where was John????”

Having just turned 10, John was not about to be put in the position of catching an alligator on a very dark night on a Louisiana bayou. I mean, C’mon…

No, John was right next to me holding the bow light port side. Did I mention it was an open bow? Michele was…unenthused.

“Wait, where was NORA???”

Almost 13, Nora was in the back of the boat holding a spotlight and drinking a Coors Light.

Clearly not my finest moment as a Dad, but my kids did get to come home and tell their friends.

My reception back home, however, was more…frosty.

It’s funnier now.

Oh that’s great. Michele thinks it’s funny now.

Uh…no. Fourteen years later and…yeah, no.

Me, Nora (12), and not John. That’s Evan the son of our host, Steve.

Fun story, Sax. What’s the point?

2nd and 3rd Order Economic Effects and Politics.

2nd order - as the price of gators killed and tagged goes down, less and less gators are caught.

3rd order - more gators grow up, get bigger, and compete for food in and, now, AROUND the bayou. Meaning further and further away from where THEY used to hunt - since there are more of them. They, too, are hunted. By other, larger gators. Year ‘round.

Over this last weekend, Steve was visiting the farm (mainly sugar cane) that is around that bayou and he went on a walk that we have walked for over two decades. Straight mile out and straight mile back. Flat. Hot and humid, but flat. Up to three laps or six miles.

I have never seen a gator on that walk before. Done it a hundred plus times.

Steve sent me a picture from that very walk of a six footer which means at least nine years old.

4th order? Fewer dogs and cats.

The biggest gator we have ever killed out on the water is an eleven footer or about 25-30 years old. (pic below)

Now let’s pivot…

Medical Malpractice - 2nd, 3rd, 4th Orders of Effect

Below is a text exchange between a Virginia doctor and his friend who sent me the texts with the permission of the doctor.

Doctor, not fan of President Trump, is on the Left side. By not a fan, I mean HATES Trump. Just for context.

1st order - more lawsuits will be brought and settle out of court for MUCH higher awards.

Okay - there are, in fact, doctors who screw up and patients are, in fact, victims of that and deserve to be compensated. No one disputes that.

We all have or have heard of these stories - personally. Health care is, after all, VERY personal.

2nd order - increased risk of those higher insurance claims/awards paid out means insurance carriers conduct long term risk analysis concluding their financial coverage of doctors is no longer worth the investment. They move that investment out of Virginia before legislation takes effect. (see above)

3rd order - fewer carriers of Med Mal insurance means less competitive market on TOP of higher awards and financial payouts.

4th order - more tests are ordered to mitigate risk of insurance claims, increasing the cost of health care.

5th order…6th order…etc…

As noted above - doctors stop seeing Medicaid patients due to lower gross and net income vs time spent with higher paying patients. #MathStillMaths

Which patients are more likely to bring a lawsuit?

Eventually, like hungry gators, doctors NEED to leave the market. #StudentDebtMath

Fewer doctors in the area. Longer waits.

Next order “I can’t see a doctor. I’m young and healthy. Why should I pay for this health care premium? I have other bills to pay. If I need a doctor, I’ll just go to the Emergency Room.”

Fewer payers into the health care system as health care costs go up.

Insurance carriers charge more to those who do pay.

Premiums go up.

“Well, then we’ll live healthier!”

No. You won’t. We haven’t yet.

Some people will still insist on going out on the bayou, at night, trying to grab a damn alligator for the sole purpose of taking a picture with it.

While not sober.

“We’ll outlaw that!” “SAVE THE CHILDREN!”

“Not now, Michele.”

<end scene>

More gators. Bigger gators. Move inland.

Less dogs and cats.

Next order - save money on pet food.

Thank GOD data centers don’t need doctors.

One morning’s hunt of saving puppies and kittens

Not all heroes wear capes.

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