Georgia Governor Brian Kemp, in a bold move, struck down a bill that sought to put a two-year hold on the juicy tax breaks enjoyed by computer data centers for construction and equipment. The governor swung his veto pen against House Bill 1192 on Tuesday, following what's been called an "intensive lobbying effort" to keep the tax exemption alive.
The governor justified his decision, as he highlighted that businesses were already banking on the exemption, and that any "abrupt" freeze coining in on July 1 would only serve to sabotage the hard-earned investments of "high-technology data center operators, customers, and other stakeholders," according to a report by WABE. Kemp's veto exhibit just how entangled tax policies and the lobbying that clings to them can get, complicating the process of reform, with critics and lawmakers alike acknowledging the tough path to removing established tax breaks.
Greg LeRoy, executive director of Good Jobs First, a liberal group that views economic incentives with skepticism, conveyed the difficulty in eliminating these carve-outs, noting, "Any time you create a carve-out in your tax code, you then create a self-interested lobby around it," as he told WABE. This situation in Georgia mirrors similar disputes in states like Virginia, and Arkansas where the proliferation of data centers is generating mixed feedback from communities and regulators.
In Atlanta, there's a buzz about the pressure to ban data centers near public transit and coveted green spaces, challenging further local incentives on top of the state sales tax break. Despite the property tax revenue they provide, data centers are notorious for modest job creation, weighing heavily against the incentives they receive. Meanwhile, the International Energy Agency warns that power consumption by these facilities is likely to double by 2026, prompting a serious look at efficiency. The battle over these exemptions is more than just about economics—it straddles tightrope between progress and sustainability.
Environmental advocates, still fired up, take issue with the prospective gas-fueled plants powering these data centers, pinning them as big footprints on Georgia's carbon ledger. Jennette Gayer, director of Environment Georgia, raised a red flag over the state's approach, saying, "Giving data centers a tax break without investigating their impact on our environment and billpayers is shortsighted," according to WABE. This skirmish also brings to light the heavy water use by data centers, a crucial environmental consideration that adds depth to the ongoing debate about the appropriateness of such subsidies.
Though the bill was axed, its intent lingers: to establish a committee that would dissect the impact data centers have on the electrical grid. With the University of Georgia's Carl Vinson Institute of Government estimating a loss of $307 million in revenue from the sales tax exemption between 2024 and 2030, the financial implications are stark. Standing in contrast to the expected $44 million revenue gap this year alone. Lieutenant Governor Burt Jones, with his eyes on further state income tax cuts, finds himself facing a fiscal puzzle, needing to prop up tax revenues to cover his ambitious goals.
There's talk of revisiting the tax break next year, and Senate Finance Committee Chairman Chuck Hufstetler remains steadfast on his mission to scrutinize tax perks, saying, "I think it’s extra difficult to get them out," as stated by WABE. His determination mirrors a larger battle, one of balancing innovation with responsibility, progress with fairness, and the private interests with the public good.
