Ohio suspends data center tax break as tech firms face pressure to pay the cost to power AI - ABC News
Ohio is suspending a critical statewide tax break for data centers due to skyrocketing costs and growing public opposition. A citizen-led effort is underway to place a referendum on the November ballot for a permanent statewide ban on hyperscale data centers, while the state legislature has formed a committee to study the industry's impact.
Ohio Governor Mike DeWine has announced a "pause" in granting a significant state sales tax exemption for data centers, effective immediately for new applicants. This decision comes as the tax break's utilization dramatically increased, far exceeding initial projections and reaching nearly $1.6 billion in 2025. Governor DeWine's office cited the rising costs and a newly formed legislative committee dedicated to studying the impact of data centers as the rationale for the temporary suspension.
The move is a direct response to growing public opposition across Ohio regarding the energy-hungry nature of AI data centers. Concurrently, a citizen-led initiative is actively gathering over 400,000 signatures by a July 1 deadline to place a referendum on the November midterm ballot. This ballot measure aims to implement a permanent, statewide ban on hyperscale data centers, which could become the strictest such ban in the U.S. While Governor DeWine supports data centers as crucial for the economy, the state's escalating tax break expenditures reflect a national trend of increasing scrutiny on such incentives, mirroring ongoing debates in states like Virginia regarding similar tax breaks.
Dorsey Hager, executive secretary-treasurer of the Columbus/Central Ohio Building and Construction Trades Council, expressed concern that the pause could deter developers. State Rep. Adam Holmes acknowledged the widespread public concern, stating it has become a priority issue for lawmakers as they study the industry's impact on Ohio.