Lawmakers up transparency for data centers, leave $2B tax exemption untouched in Pa. budget
Pennsylvania lawmakers passed a measure requiring data centers consuming over 10 MW of electricity annually to disclose their energy and water usage. However, a $2 billion sales tax exemption for data centers remains in place, and other proposed regulations failed to pass in the state budget. Discussions are expected to continue regarding more comprehensive data center regulations and the possibility of empowering local governments to enact moratoriums.
Pennsylvania lawmakers recently passed a single measure related to data centers as part of the state's $50.8 billion budget, mandating that data centers using more than 10 MW of electricity annually disclose their energy and water usage. Environmental advocates described this as a positive but not particularly meaningful change, as it leaves untouched a significant sales tax exemption for data centers, projected to cost the state $2 billion by mid-2031.
Despite numerous proposals from both the State House and Senate aimed at regulating the burgeoning industry, including bills to ban tax breaks, allow local moratoriums, and establish environmental and utility interaction standards, none of these broader measures made it to the governor's desk. This legislative inaction comes amid growing public opposition, with polls indicating 64% of Pennsylvanians view data centers as problematic.
State House Majority Leader Matt Bradford, a Democrat from Montgomery County, criticized Senate Republicans, led by Majority Leader Joe Pittman of Indiana, for their alleged disinterest in moving data center regulation legislation. A spokesperson for Democratic Gov. Josh Shapiro echoed this sentiment, blaming Senate Republicans for failing to act on the governor's plan to link data center tax credits to environmental and energy standards. Pittman, however, stated that Senate Republicans are open to further discussions, including measures to allow local moratorium decisions, and accused Bradford of mischaracterizing his position. Environmental groups, including the Sierra Club and Conservation Voters of Pennsylvania, expressed frustration, calling for comprehensive legislation when the legislature reconvenes in September, emphasizing that "half-measures" are insufficient.