(The Center Square) – A Wisconsin bill would give a blanket exemption for all future data centers in the state that would allow the projects to be part of tax capture districts even if that means that more than the state-allowed 12% of property in a community is part of a tax increment financing district.
The 12% rule is in place related to local property taxes because the exemptions mean that businesses in a TIF aren’t paying into the local property tax base yet are using local resources. Therefore, companies are able to retain the funds to spend on future improvements of their facilities.
Last year, the Wisconsin Legislature approved a bill exempting materials that are used to build, operate or renovate large-scale data center facilities from taxes.
There are currently multiple bills in the Wisconsin Legislature that would exempt specific projects from the 12% limit – including for data centers in Pleasant Prairie, Beaver Dam and Port Washington – but Senate Bill 241 would allow all future data centers to be exempt from the 12% limit.
“We thought it would be a good idea, since we have already defined what this data center is with the tax exemptions in the last session, we thought it would be a good idea to just make a blanket exemption for these so we don’t have to come back and save resources, save energy, save time so we don’t have to come back and approve every one of these individually as it goes along,” Sen. John Jagler, R-Watertown, told the Senate Committee on Government Operations, Labor and Economic Development.
Jagler said that data centers are being singled out for the tax incentives because they create a situation where TIF limits are so far exceeded.
“While that 12% cap is there for a reason and well-meaning, these data centers are so big and so valuable and such a prize for a community that it really creates a problem,” Jagler said.
Data centers are becoming increasingly necessary as cloud-based memory and computing capabilities increase but tax incentives for those centers are questioned due to the lack of long-term jobs at the sites, the energy needs and the potential increase in consumer energy bills that accompany those data centers.
A least 10 states are currently losing $100 million or more in taxes from data centers, according to an April report from Good Jobs First.
Meanwhile, the average American’s energy bill could increase from 25% to 70% in the next 10 years without intervention from policymakers, according to Washington, D.C.-based think tank the Jack Kemp Foundation.
The Wisconsin Senate recently approved a $2.25 million nuclear study to increase the state’s energy capacity while EnergySolutions announced it was beginning planning and looking for a permit to reopen Kewaunee Power Station in Kewaunee County while working with WEC Energy Group.
During discussions of the nuclear siting, Rep. David Steffen, R-Howard, said that a new Microsoft data center in Mount Pleasant would use the same amount of energy as the city of Madison and the Cloverleaf project in Port Washington would use the same amount of power as the entire city of Los Angeles.
Jagler said that a Meta data center planned for Beaver Dam is coming but the TiF will allow it to expand in the future.
“In Beaver Dam, they are going to build this data center but, they basically have no ability to grow or use their TIF to grow,” Jagler told the committee.
The cost, however, is the impact on property tax and energy bills for consumers.
Rep. Suhas Subramanyam, D-Va., told the House Committee on Oversight and Government Reform last month that the increase in data centers across the country will strain utilities, leading to higher utility costs, a need for more power lines, and annexing more “green space” and water.
He warned that energy bills could increase “by up to $276 a year,” saying they could double within seven to 10 years to power the data centers.
