Ohio's spending billions on tax breaks for data centers. Now an incentive battle is brewing.

Ohio is currently embroiled in a legislative battle over sales tax breaks granted to data center projects. Critics, including a bipartisan group of state lawmakers, argue that these incentives are excessively costly, with state tax records indicating approximately $140 million in annual losses, and a report suggesting over $2.5 billion in incentives since 2014. Senator Kent Smith is spearheading a bill to repeal these sales tax exemptions, contending that everyday Ohioans are not receiving an adequate return on investment. Conversely, the construction industry, major tech companies like Amazon, Google, Microsoft, and Meta, and statewide business groups are vehemently lobbying to preserve the tax breaks. They assert that eliminating these incentives would be detrimental to Ohio's economy and would push data center development to other states. Chuck Keysville, a union labor leader, supports the data center influx for the construction jobs it brings, despite acknowledging local opposition. The debate intensified last year when state lawmakers voted to cut the sales tax break as part of a budget bill, but Governor DeWine vetoed the measure, citing Ohio's need to remain competitive for such investments. Proponents of the tax breaks, like Dan DiOrio from the Data Center Coalition, are working to illustrate the broad economic impacts of the industry to convince lawmakers. The current legislative push seeks to override the Governor's previous veto or pass a new bill, but it remains uncertain if there are enough votes to do so. Existing tax credit deals, however, would not be affected by any new repeal.