Should data centers get billions in tax breaks? Texas lawmakers to take another look.

Texas lawmakers are questioning the benefits of billions of dollars in sales tax breaks granted to data centers across the state. The Texas Comptroller's office presented data to the Texas Senate Finance Committee, revealing that while the tax breaks were initially projected to cost the state $15 million per two-year budget when enacted in 2013 and 2015, they now amount to $3.3 billion due to the boom in cloud computing, cryptocurrency, and artificial intelligence.

The review highlighted concerns about the return on investment for taxpayers. To qualify for these tax breaks, companies must meet certain requirements after five years, including specific spending, facility space, and hiring at least 20 permanent employees. The Comptroller's office reported that nearly a third of the 138 data centers receiving tax breaks are not meeting these marks. Out of 20 audited facilities (audits can only occur after five years of operation), six, or almost 30%, were found to be non-compliant, with some lacking sufficient square footage or failing to employ the required number of full-time staff.

Senator Kelly Hancock expressed surprise at the findings, questioning why companies receiving such significant tax exemptions would not employ the minimum number of people. While the Data Center Coalition, a major advocacy group for big tech data centers, points to tens of billions in economic development, lawmakers are deliberating whether these tax breaks are still justified given the current landscape and compliance issues. The video producer noted a public records request has been filed for the names of the non-compliant companies.