Gov. DeWine protected a wasteful tax break. The legislature should override his veto.
Ohio’s House of Representatives may soon vote to limit a generous tax break the state gives to companies building data centers. It would require overriding Gov. DeWine’s veto of an earlier effort to prevent new agreements for sales tax exemptions on certain data center equipment. This tax break costs the state more than $140 million a year in forgone revenue. (A veto override would not restore that amount because the repeal is not retroactive; it would only prevent new agreements from including the exemption.) Policy Matters criticized the governor’s veto; the legislature should override it.
“By one industry leader’s own admission, this exemption is unnecessary,” said Policy Matters Ohio Executive Director Hannah Halbert, citing a Microsoft executive’s remark to the New York Times that he “can’t think of a site selection or placement decision that was decided on a set of tax incentives.”
Halbert added, “Of course, much of the damage is already done, since repeal would not affect existing agreements, which will continue costing the state money for years to come.”
Ohioans all over the state are turning out at public meetings, raising myriad concerns about data center development, including water and electricity use, energy affordability and ratepayer protections, and air quality and public health concerns. “These are real concerns for Ohio communities,” Halbert said. “Our elected officials should not be handing out unnecessary incentives while Ohioans grapple with these concerns.”
According to filings with the Department of Development, companies receiving the credits create relatively few permanent jobs with data center projects. “The jobs created in the construction and maintenance of data centers, however, can be substantial, if not permanent,” Halbert said. “Job growth is a factor in determining any project’s value to Ohio workers and the surrounding community, but it’s only one among many, and should not automatically prompt legislators to provide special tax treatment.”
“Lawmakers can and should create safeguards to protect Ohio’s working families, ratepayers, and the environment, from the harm that can be done by data centers,” Halbert said. “Legislators should hold data center companies accountable for the impact on local communities, rather than subsidizing the industry at their expense.”
“Data centers are necessary infrastructure for some of the largest, richest corporations on the planet. Ohio’s climate, geography, and skilled workforce make the state a prime location for this rapidly expanding industry. Ohio policymakers should do all they can to ensure local communities and workers are at the table and not on the menu.”
Ohio has bipartisan models for changing course on data center tax breaks