Harrisburg weighs whether to rein in data center construction with a carrot... or a stick
The Pennsylvania state House passed three measures to regulate data center development, including a six-month construction pause to allow zoning rule updates and changes to tax subsidies. The state Senate also showed interest in ending these subsidies, amending a related bill. Debates continue as the measures are tied to the state budget deadline.
Pennsylvania's state legislature is actively addressing public concerns regarding data center development. The state House recently passed three significant measures aimed at moderating the industry's growth. One proposal, approved almost unanimously, would enact a six-month moratorium on data center construction to allow local municipalities to update their zoning regulations.
Additionally, the House took steps to reform or eliminate state tax subsidies for data centers. One measure, aligned with Governor Josh Shapiro's "GRID" plan, would continue incentives but only for developers meeting environmental and transparency standards. A separate, more decisive vote saw the House pass a bill to terminate all state subsidies for data centers entirely. The Senate has also shown support for ending these tax-credit programs, amending an unrelated House bill to include such a provision, which Senate Democratic leader Jay Costa estimates could save the state over half a billion dollars by 2030.
The legislative efforts face some opposition, with Republican lawmakers like Eric Nelson arguing that Pennsylvania should welcome the industry, and Scott Barger suggesting current incentives are too small to influence major tech companies. The process is further complicated by the use of "vehicle bills" for budget priorities, leading to debates over other provisions like the repeal of a utility tax and expansion of an education tax credit, which must now return to the House for a vote. Senator Lindsey Williams criticized the lack of direct regulation on data centers, citing their impact on electric bills.