Lawmakers fail to reach data center deal
Ohio lawmakers failed to reach a compromise on new data center regulations, including reduced sales tax breaks, before their summer recess. The proposed Substitute House Bill 646 also aimed to mandate closed-loop water systems and establish a specific electric rate class for data centers. Lawmakers will reconvene on June 24 to try and find a resolution.
Ohio lawmakers were unable to reach a compromise on Substitute House Bill 646, a legislative proposal to introduce new regulations and standards for data centers, before entering their summer recess. The bill, which failed to garner enough votes, aimed to reduce sales tax breaks for new data center projects from 100 percent to 50 percent.
However, existing contracts with major tech companies like Meta, Google, and Amazon, some spanning decades, would remain unaffected by the proposed tax changes. Ohio House Speaker Matt Huffman, R-Lima, expressed sentiment from his caucus against granting full tax exemptions to multibillion-dollar corporations, especially given the state provided almost $1.57 billion in sales-tax exemptions last year, significantly exceeding initial estimates. Governor Mike DeWine had previously vetoed an attempt by the general assembly to eliminate the data center sales tax exemption entirely.
Beyond tax reforms, H.B. 646 included provisions addressing environmental concerns, requiring data centers to use closed-loop water systems or adhere to best practices for water conservation and efficiency. Facilities would also be mandated to report water quality anomalies. Furthermore, the bill sought to improve transparency regarding non-disclosure agreements with public officials and establish a new electric rate class for data centers to ensure they cover generation, transmission, and distribution costs. With the impasse, the House plans to return on June 24 to seek a compromise.