Data center developers rush for Arizona tax breaks before three-year moratorium
Arizona enacted a three-year moratorium on tax breaks for data centers, effective July 1. This led to a rush of 113 applications from developers in the two weeks before the pause. Governor Katie Hobbs signed the measure, citing the need to prioritize citizens over corporations and save $57 million for social services.
Arizona's Governor Katie Hobbs signed a new state budget on June 13 that includes a three-year moratorium on tax breaks for data centers, effective July 1, 2024, until 2029. This policy change prompted a significant surge in applications from data center developers.
In the two weeks prior to the moratorium taking effect, the Arizona Commerce Authority (ACA) received 113 applications for tax relief, nearly matching the total 123 applications received over the previous 13 years since the program launched in August 2013. The ACA noted that many of these recent applications were for additional facilities at existing data centers rather than entirely new projects. The agency has 60 days to process these applications.
Governor Hobbs stated that the tax-break pause is expected to save the state $57 million, which will be redirected to social services such as food assistance, childcare, and healthcare. She emphasized that Arizona would not be a "blank check" for corporations, asserting that a state should not prioritize servers over its citizens. The moratorium comes amid growing public backlash against data centers, with residents in areas like Tucson, Mesa, and Marana protesting their strain on local water and energy resources during a prolonged drought.
Advocacy groups, including Living United for Change in Arizona, celebrated the moratorium as a victory, arguing that the public subsidies previously benefited "billion-dollar data centers" at the expense of community services and resources.