New Jersey pauses AI data center tax break program
New Jersey has paused its "Next New Jersey Program-AI," which offered significant tax breaks to AI data center companies, following months of backlash. Governor Mikie Sherrill's office is conducting a full review of the program due to concerns over high water and electricity usage by data centers and the cost-effectiveness of job creation. The NJEDA confirmed the temporary pause on new applications.
The state of New Jersey has temporarily paused its "Next New Jersey Program-AI," a program designed to attract artificial intelligence data centers through substantial tax breaks. The decision comes amidst growing public opposition and concerns regarding the extensive water and electricity consumption of data centers, which have been linked to increased utility rates for residents.
Governor Mikie Sherrill's office initiated a comprehensive review of the program, which was originally launched in 2024 under then-Gov. Phil Murphy. The review aims to assess the program's impact on local communities and determine if the economic benefits, particularly job creation, justify the considerable tax subsidies provided. For instance, CoreWeave in Kenilworth received $230 million in tax breaks with a promise of 140 jobs, a cost-per-job that critics like Ben Dziobek of Climate Revolution Action Network argue is exorbitant.
Climate Revolution Action Network has actively protested against data center developments and the use of taxpayer money for these companies, noting that 20 municipalities in New Jersey have already enacted bans on data centers. In response to the pause, the NJ Economic Development Authority (NJEDA) stated its commitment to supporting the AI industry while ensuring data centers operate responsibly within strong, transparent guidelines.