Ohio pauses tax breaks for data centers
Ohio Governor Mike DeWine has paused state sales tax exemptions for data centers, pending a study by the Joint Data Center Study Committee into their economic and environmental impacts. This decision comes amidst legislative debate and criticism from the Ohio Chamber of Commerce, and follows revelations of a significant revenue loss from the tax breaks. The pause aims to allow a thorough review of data center benefits and costs, including their water and electricity consumption.
Ohio Governor Mike DeWine announced a pause on state sales tax exemptions for data centers, a decision made just hours after the first meeting of the state legislature's new Joint Data Center Study Committee. DeWine stated his support for the committee's work in assessing the economic and environmental impacts of data centers and believes the pause is appropriate during this review period. He clarified that he is not seeking to ban data centers, acknowledging their importance to Ohio's technology-driven economy and the reported $27.2 billion capital investment from previously exempted facilities.
However, the decision drew criticism from the Ohio Chamber of Commerce, with president Steve Stivers arguing it makes Ohio less business-friendly. The tax breaks have been a contentious issue, with House Speaker Matt Huffman (R-Lima) previously attempting to repeal them, a move vetoed by DeWine. A recent report from Signal Ohio revealed that these exemptions cost the state over $1 billion in lost revenue last year, prompting outrage from House Minority Leader Dani Isaacsohn (D-Cincinnati) over the discrepancy with previous estimates.
During testimony before the joint committee, Dan Diorio of the Data Center Coalition defended the tax subsidies, stating they encourage broader economic activity and continuous reinvestment in facilities. He also addressed misconceptions about water usage, claiming data centers are highly efficient. In contrast, Mary Mertz, director of the Ohio Department of Natural Resources, expressed general concern about water quantity despite Ohio being a water-abundant state, urging thoughtful placement of facilities. Ohio Consumers’ Counsel Maureen Willis noted that data centers contribute to increased electricity capacity prices, as demand from other sectors has been flat or declining. Senator Brian Chavez (R-Marietta), chair of the committee, called for a pragmatic approach, suggesting other factors like coal plant closures might also influence energy prices.