Tennessee data centers raise questions over tax breaks, loss of revenue to state
Tennessee State Rep. Aftyn Behn plans to introduce a bill to temporarily halt new data center sales tax exemptions for three years and mandate state tracking and public reporting of lost tax revenue. The legislation aims to increase transparency regarding the financial impact of data center tax breaks and identify recipient companies. This move comes amidst resident concerns about resource consumption and a lawsuit against Metro Nashville regarding a proposed data center.
Tennessee State Representative Aftyn Behn announced plans to file the "Blank Check to Data Centers Act" for the 2027 legislative session. The proposed bill seeks a three-year pause on new sales tax exemptions for data centers and requires the Tennessee Department of Revenue to track and publicly disclose the amount of sales and electricity tax revenue the state foregoes due to these incentives. Behn highlighted that current laws prevent the state from accurately calculating these losses or identifying the 15 companies holding 25 active exemption certificates.
Residents have voiced mixed opinions on data centers. Kevin Bledsoe raised concerns about their consumption of natural resources, including water, and noise pollution, advocating for transparency. In contrast, Matt Tays acknowledged the benefits, particularly in the context of AI. The proposed bill aims to address these transparency issues by making public the names and counties of facilities receiving tax breaks.
This legislative initiative is set against a backdrop of local controversies, including ongoing resident opposition and a lawsuit filed by DC BLOX against Metro Nashville concerning a proposed data center near the Nashville Zoo. Another related news item mentions Gallatin leaders are considering a data center moratorium.