TX Giving $3.2 Billion In Sales Tax Exemptions In Next 2 Years To Datacenters - And That's Likely A "Vast Underestimate"
Texas will lose out on $3.2 billion in sales tax revenue over the next two years thanks to an exemption for the state’s booming data center industry, according to the comptroller’s office. That figure is likely a vast underestimate given the explosion of new facilities being built, but already makes the tax break one of the state’s costliest incentive programs and soon to be the most expensive of its kind in the nation.
Lawmakers, who will meet in January for the next legislative session, say they are considering proposals to either limit the scope of the tax break or get rid of it altogether. “These new numbers are extremely concerning, and I will say they’re unsustainable,” said state Senator Joan Huffman, chair of the Senate Committee on Finance, in an interview with The Texas Tribune. “I plan to look at filing legislation to either repeal the exemption or take a very close look at it and see.”
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The money Texas is poised to lose from the tax break on a yearly basis could pay for the entirety of the state’s new school voucher program, or it could double the size of a state disaster fund to help local communities like Kerr County prevent flooding. It’s also quickly outpacing the cost of Texas’ highly controversial Chapter 313 tax abatement program, which allowed manufacturing companies to avoid paying local school property taxes, drawing the ire of lawmakers who eventually shut down the program last year at its height of more than a billion dollars a year.
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Data center industry leaders warn that shrinking or ending the tax break could spell an end to Texas’ rising status as the nation’s No. 1 destination for data centers, a status the industry argues comes with new jobs and billions of dollars in local investment. “I think the hostile message that sends would … give a lot of different companies pause about what the state of being able to invest in Texas for the long term is,” said Dan Diorio, vice president of state policy with the Data Center Coalition, a trade group that represents major tech companies.
Meanwhile, data centers are becoming increasingly unpopular among locals. Cities like San Marcos, Amarillo, College Station, Waco, and Harlingen have seen grassroots movements pressuring local officials to block data center projects. A recent Quinnipiac poll found 65 percent of Americans oppose the construction of a data center in their community.
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https://grist.org/accountability/texas-is-giving-data-centers-more-than-1-billion-in-tax-breaks-each-year/