The Georgia legislative committee voted on Friday to pass House Bill 1192, a bill that would temporarily suspend the tax break for new data centers while lawmakers further study whether to continue or modify the incentive. This decision comes after the House approved the bill last month in a 96-71 vote, and it will now move on to the full Senate for consideration.
Since 2018, Georgia has offered substantial tax savings for large or “hyperscale” data centers. This law provides tax breaks for the equipment housed within these facilities, following a model similar to a law in Virginia that has been adopted by many other states across the country.
However, the increasing presence of data centers in Georgia has raised concerns about the state’s power supply. Data center servers require significant amounts of electricity to operate 24/7, leading Georgia Power, the state’s largest utility, to express the need to enhance its system capacity to meet the growing demand.
Georgia Power has requested approval from state regulators to add nearly 3,400 megawatts of new capacity, which is equivalent to about three times the maximum output of one of the new nuclear reactors at Plant Vogtle. Company executives have indicated that data centers account for approximately 80% of the expected new load.
Although tax breaks play a role in the decision-making process for companies like Microsoft, which operates multiple data centers in Georgia, they are just one of several factors considered. Microsoft noted that it evaluates 35 criteria when planning new facilities, with incentives being a significant consideration among them.
Despite their large size, data centers have minimal employment opportunities as they primarily serve as storage centers for computer servers. Josh Levi, the president of the Data Center Coalition, highlighted the significant investments made in data centers in Georgia since the tax break was renewed in 2022, emphasizing the importance of predictability and certainty for businesses.
Local officials in counties hosting data centers have reported generating thousands of construction jobs and benefiting from increased property tax revenue. Niki Vanderslice, the president and CEO of the Fayette County Development Authority, underscored the impact of data centers on the local tax digest and the community.
While some committee members questioned the decision to suspend the tax break rather than phase it out gradually, others suggested that local sales taxes could be used to offset the loss of state tax breaks and attract data centers. The financial impact of the tax break suspension remains unclear, with estimates ranging from $10 million to $80 million-$100 million.
Senate Finance Chairman Chuck Hufstetler clarified that companies currently building data centers or in the process of having their tax breaks certified by the state would still be eligible for the incentives. He acknowledged the importance of addressing the potential energy crisis and improving the state’s approach to incentives.
Lawmakers who have studied the effectiveness of various business tax breaks expressed skepticism about claims that companies would not invest in Georgia without the incentives. House Ways and Means Chairman Shaw Blackmon emphasized efforts to make it easier for data centers to receive tax breaks in rural Georgia, with hopes of stimulating job growth.
The leadership of the General Assembly has historically included rural lawmakers, but the results of these initiatives in rural areas have not met expectations in terms of attracting data centers. The ongoing debate over the tax break for data centers reflects broader discussions on economic development strategies and the allocation of state resources.
Key Georgia Senate panel moves to suspend tax breaks for new data centers – Atlanta Journal Constitution , www.ajc.com , https://www.ajc.com/politics/key-georgia-senate-panel-moves-to-suspend-tax-breaks-for-new-data-centers/6ZKA527X3NC6VH2PJNZQTD6DVA/