Report: Data center tax breaks cost Ohio billions
A sales tax exemption designed to attract data centers to Ohio has cost the state $1.6 billion, significantly more than the initial estimate of $136 million. Despite legislative efforts to end the exemption, Governor Mike DeWine vetoed the measure, leading to concerns about the state's long-term financial commitments and the impact on utility costs and the environment.
Newly released data from the Ohio Department of Taxation indicates that a sales tax exemption intended to attract large technology companies, particularly data centers, has cost the state $1.6 billion. This figure is 11 times higher than the initial projection of $136 million when the exemption was established in the 2010s.
Signal Ohio reporter Jake Zuckerman highlighted that the exemption, originally aimed at more modest operations, has spiraled as data centers evolved into hyperscale facilities. Local municipalities have also experienced a significant financial hit, with statewide local sales tax losses reaching approximately $164 million, in addition to property tax abatements often granted to these projects.
The discrepancy between forecasted and actual costs raised concerns among lawmakers during the biennial budgeting process. An effort in the legislature to end the tax exemption, which was believed to cost around $130-$140 million annually based on public estimates, was vetoed by Governor Mike DeWine, who emphasized the credit's importance. Zuckerman noted that the legislature operated with inaccurate information, underestimating the true cost by over a billion dollars, with the expenses continuing to grow.
Long-term concerns include the 15-year commitments for these credits, meaning even if the state stopped offering new exemptions, existing ones would persist for years. The discussion also covered the cost-benefit for Ohioans, pointing out that data centers offer limited long-term employment post-construction, place significant strain on the electricity grid, contribute to rising utility prices for residents, and raise environmental concerns. The core public policy question remains whether the substantial public benefits flowing to these companies justify the $1.6 billion cost to the state.