Efforts to bring the Washington Wizards and Capitals to Virginia are now on life support after a proposal to finance an arena and associated entertainment district in Alexandria were stripped out of the two-year spending plan General Assembly budget negotiators began unveiling Thursday.

The decision has openly upset Republican Gov. Glenn Youngkin, who announced the project with great fanfare in December, and will almost certainly jeopardize Democrats’ legislative priorities, including raising the state’s minimum wage to $15 and allowing retail marijuana sales.

“The Senate refused to give the single largest economic development deal in Virginia’s history any serious, meaningful consideration, breaking their own long-standing tradition in the process and avoiding the broad bipartisan support in both houses,” said Youngkin during a press conference he called Thursday after news of the arena’s omission broke Wednesday night. “This bill would pass.” 

The tentative deal struck by Youngkin with Monumental Sports and Entertainment, the owner of both the Wizards and Capitals franchises, would have constructed a 9 million square foot arena and entertainment complex in the Potomac Yard neighborhood of Alexandria that would have included a practice facility for the Wizards, a performing arts venue and new retail, office, residential and hotel spaces.

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However, the deal required General Assembly buy-in on the creation of a new arena authority that would have the power to issue $2 billion in bonds for the project. While the House of Delegates passed a bill creating the authority and included the proposal in their budget plan, the arena has faced consistent opposition from Sen. Louise Lucas, D-Portsmouth, who chairs the powerful Senate Finance and Appropriations Committee. Lucas has killed standalone arena legislation from both the House and Senate, refusing even to bring them up for debate in hearings, and she was one of 12 conferees working out the legislature’s budget plan.

“There’s a broad bipartisan group in House leadership and Senate leadership that want to move forward, but they are running into a single roadblock,” said Youngkin Thursday in what was widely seen as a reference to Lucas, who with Sen. Mamie Locke, D-Hampton, looked on from the Capitol steps as he spoke. 

Speaking to reporters before Youngkin’s remarks, Lucas said, “People, not just from Northern Virginia, but from all over the commonwealth sent me text messages and emails and phone calls saying that they just don’t like the idea of putting taxpayers money behind the project of a billionaire. So I’m totally down standing with the voters of Virginia.”

The Washington Post calculated that Virginia taxpayers could pay as much as $1.35 billion for the project, which has divided opinions among Alexandria and state residents. While some have praised the project for its potential economic yields — supporters say the overall impact could be as much as $12 billion — others have voiced concerns about the negative impacts on taxpayers, transportation, environment and quality of life. 

Senate Majority Leader Scott Surovell, D-Fairfax, said he was disappointed the proposal never got a hearing in the Senate due to Lucas’s opposition.

“Normally in the Senate we have a tradition of docketing every bill that’s filed by a member and discussing and debating and voting on issues in public,” Surovell said. “I wasn’t happy we didn’t get to do that.”

The Democratic leader said he had a reworked version of the arena legislation backed by Youngkin ready to present at a Senate committee hearing, but never got the chance. If Youngkin sends down the arena proposal again via a budget amendment, he said, the legislature has to vote it up or down but won’t have the ability to change it.

Surovell said he doubts Monumental can wait another year and bring back the arena plan in 2025, adding he sees some risk the company could just pull the plug on the idea.

“This whole process has cost them a lot of time and money,” Surovell said. “It’s probably cost them some capital on their brand. And I’m sure they don’t want to drag this out forever.”

House Appropriations Chairman Luke Torian, D-Prince William, said he was “perhaps a little disappointed” the arena didn’t make it into the House and Senate budget deal.

“That’s the nature of trying to govern here in the commonwealth and trying to get a budget out on time,” Torian said.

Asked why the arena wasn’t in the budget, Torian refused to elaborate.

“I cannot explain to you why it’s not in there,” he said.

Morgan Hopkins, a spokeswoman for the House Democratic Caucus, then said Democratic leaders “don’t negotiate in public.” She later acknowledged the negotiations are now over but said that Democrats still would not comment on how the negotiations went.

Torian said the budget includes 3% raises for teachers and state employees in each of the next two fiscal years, more funding for education and none of the tax cuts Youngkin proposed.

Sen. Adam Ebbin, D-Alexandria, who represents the area where the arena would be constructed, said that after weeks of discussion, he’s not surprised by the development. 

“I don’t think this is in the best interest of the commonwealth,” said Ebbin. “It’s a lot of money without a fully thought-out plan on transportation or labor relationships. So I’m fine where we are.”

The final hopes for the arena proposal moving forward now rest with the governor, who has the option of bringing it forward via a budget amendment or calling a special session to discuss it as a standalone bill.

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Democrats seemed to be preparing for the possibility that the arena’s rejection might bring a veto spree from Youngkin.

“He can try the kamikaze routine if he wishes,” Locke said shortly after Youngkin’s news conference.

Surovell, however, argued rejecting legislation such as bills creating a retail cannabis market or raising the minimum wage would be “extremely out of step with the Virginia electorate.” 

Lucas said that even if Youngkin vetoes her bills, she’ll have other opportunities to pass them.

“When you stand against something that the governor wants, you know you’re going to lose something, and I anticipated that,” Lucas said. “But he’s here for another two years. I’m here for four.” 

Surovell also expressed concern that the challenges to the arena proposal could jeopardize future development projects in the commonwealth. He said one of the reasons the state’s Major Economic Incentives Project Approval Commission exists is to create some predictability regarding economic development projects. The commission backed the proposal unanimously in December.

“Virginia has historically been very pro-business,” Surovell said. “I think we’ve always been viewed as a good place for jobs and business. I think we will continue to be, but when you’re going to put a lot of time, money, and effort into a big economic development project like that, there needs to be some stability and predictability in the process.” 

“We’re in a cutthroat competition with a lot of states for these kinds of deals,” he continued, “and we have to be very careful about rejecting them once they’ve cleared certain hurdles like MEI.”

Those concerns were also voiced by Youngkin, who said, “The way the Senate has handled this opportunity I fear damages Virginia’s business environment.” 

“It’s a clear signal that opportunities to welcome new investment and jobs, even ones of historic magnitude, will not be evaluated on their merit but instead will be viewed through the lens of partisan, parochial interests,” he said. 

Senior reporter Graham Moomaw contributed to this story.