Arizona budget deal includes 3-year pause on data center tax exemptions
Arizona state leaders have reached a budget deal that includes a three-year pause on tax exemptions for new data centers. This decision comes amidst concerns from Gov. Katie Hobbs and others regarding data centers' high power and water consumption impacting utility bills and the environment. The pause is intended to allow time to ensure data centers benefit Arizonans.
Arizona state leaders, including Gov. Katie Hobbs and Senate Majority Leader John Kavanagh, announced a budget deal that notably includes a three-year moratorium on tax exemptions for new data centers. This compromise marks a significant shift from a decade-old policy that had incentivized the proliferation of over 150 data centers across the state.
Gov. Hobbs, who previously voted for the exemption, now criticizes it as a "$38 million corporate handout," citing public concerns over data centers' high electricity and water usage, and their potential impact on utility bills and the environment. While Republicans, represented by Kavanagh, initially resisted a full repeal due to existing agreements and the economic development benefits data centers bring, the agreed-upon pause will not affect data centers already receiving tax breaks.
Danny Seiden, President and CEO of the Arizona Chamber of Commerce and Industry, acknowledged the economic benefits of data centers but expressed hope for the eventual return of the tax exemptions. The budget bills, incorporating this pause, are scheduled for committee review before a full legislative vote.