Georgia lawmakers vowed to restrain tax breaks. But the governor’s veto saved a data-center break

May 8, 2024, 12:41 PM

ATLANTA (AP) — Georgia lawmakers vowed they were going to rein in tax breaks for businesses this year.

Their efforts came to nothing.

Gov. Brian Kemp on Tuesday vetoed a two-year pause in a sales tax exemption the state gives for building and equipping computer data centers, after an intensive lobbying effort to preserve the tax break.

Kemp’s veto shows how hard it is to root out established tax breaks, said lawmakers and national experts.

“Any time you create a carve-out in your tax code, you then create a self-interested lobby around it,” said Greg LeRoy, the executive director of Good Jobs First, a liberal-leaning group long skeptical of economic development incentives.

The Republican governor wrote that he was vetoing House Bill 1192 because businesses had already made plans for data centers using the exemption and that the “abrupt” July 1 freeze would undermine “the investments made by high-technology data center operators, customers, and other stakeholders in reliance on the recent extension, and inhibiting important infrastructure and job development.”

The dispute in Georgia mirrors fights in other states including Virginia, where the rising number of data centers is sparking a backlash, and in Arkansas, where lawmakers are moving to impose new restrictions on data centers that mine cryptocurrency.

In Georgia, some people are pushing the city of Atlanta to ban data centers near transit stations and the Beltline walking trail, as well as to stop offering local property tax abatements atop the state sales tax break. Although local jurisdictions benefit from property taxes on investments that can run into the hundreds of millions of dollars, data centers typically support few jobs.

Freezing the data-center tax exemption was the only bill that advanced following a a monthslong review of all the tax breaks that Georgia offers to various industries Lawmakers earlier gutted and then discarded an effort to cap the $1.35 billion Georgia spends on income tax credits subsidizing movie and television production.

So many data centers are opening or expanding in the state that it is causing a notable drain on the power grid, leading Georgia Power Co. to say it quickly needs to build or contract for new electrical generation capacity. The International Energy Agency says electrical consumption from data centers worldwide could double by 2026, calling for a focus on efficiency.

Georgia Power says new users will more than pay for the additional generating capacity that public service commissioners approved last month, putting downward pressure on bills for other users. But others are wary of those claims because of a climb in electrical bills in recent years.

Environmental groups are among those seeking to curb the tax exemption because Georgia Power’s new plants would be fueled by natural gas, increasing fossil fuel emissions. Environmental groups also worry about how much water data centers use to cool their computers.

“Giving data centers a tax break without investigating their impact on our environment and billpayers is shortsighted,” Jennette Gayer, director of Environment Georgia, said in a statement.

The bill would have created a committee to study the impact of data centers on the electrical grid.

A 2022 review of the sales tax exemption by the University of Georgia’s Carl Vinson Institute of Government projects the state will forgo $307 million more from 2024 through 2030 than it will collect from sales taxes on data center construction and operations. For example, the state is projected to forgo $44 million in revenue this year but only get $13 million back from other sales taxes.

The failure also raises questions about Republican Lt. Gov. Burt Jones’ long-term goal of further cutting Georgia’s state income tax rate for all residents and businesses. He wants to shore up other tax revenue to offset those cuts.

Senate Finance Committee Chairman Chuck Hufstetler, a Rome Republican who has spearheaded efforts to scrutinize tax breaks, said lawmakers could revisit the data center tax break next year. He said that he has in part focused on keeping new exemptions from becoming law.

“It’s disappointing that we moved that slow, but it will be a continuing process as we look at these,” Hufstetler said. “I think it’s extra difficult to get them out.”

National News

Associated Press

Stock market today: Asian shares track Wall Street’s slide on worries over interest rates

Asian shares retreated Friday after strong reports on the U.S. economy raised the possibility of interest rates staying painfully high. U.S. futures edged higher and oil prices also rose Japan’s Nikkei 225 index lost 1.2% to 38,646.11 and the Hang Seng in Hong Kong fell 1.5% to 18,589.89. South Korea’s Kospi declined 1.2% to 2,688.60, […]

31 minutes ago

Associated Press

More severe weather forecast in Midwest as Iowa residents clean up tornado damage

GREENFIELD, Iowa (AP) — The skies were blue and the wind was blowing as residents of the small city of Greenfield, Iowa, worked to clean up two days after a destructive tornado ripped apart more than 100 homes in just one minute, took the lives of four residents and injured at least 35 more. All […]

3 hours ago

Associated Press

Ohio governor calls special session to pass legislation ensuring President Biden is on 2024 ballot

COLUMBUS, Ohio (AP) — Ohio’s Republican Gov. Mike DeWine said Thursday that he is calling a special session of the General Assembly next week to pass legislation ensuring President Joe Biden is on the state’s 2024 ballot. “Ohio is running out of time to get Joe Biden, the sitting President of the United States, on […]

10 hours ago

Associated Press

Arizona doctors can come to California to perform abortions under new law signed by Gov. Newsom

SACRAMENTO (AP) — Arizona doctors can temporarily come to California to perform abortions for their patients under a new law signed by Gov. Gavin Newsom. California’s law is meant to circumvent an Arizona law — first passed in 1864 — that bans nearly all abortions in that state. The Arizona Supreme Court had ruled that […]

10 hours ago

Associated Press

Judge says $475,000 award in New Hampshire youth center abuse case would be ‘miscarriage of justice’

CONCORD, N.H. (AP) — The judge who oversaw a landmark trial over abuse at New Hampshire’s youth detention center says capping the verdict at $475,000 as the state proposes would be an “unconscionable miscarriage of justice.” In a lengthy order issued Wednesday, Judge Andrew Schulman outlined five options for addressing the dispute that arose after […]

12 hours ago

Associated Press

Those who helped file voting fraud allegations are protected from suit, North Carolina justices say

RALEIGH, N.C. (AP) — The North Carolina Supreme Court on Thursday threw out a defamation lawsuit against attorneys who assisted voters with submitting some 2016 ballot complaints, saying the fraud allegations they helped make were broadly protected within the protest process. The 5-0 ruling overturns the decision of a lower appeals court that determined only […]

12 hours ago

Georgia lawmakers vowed to restrain tax breaks. But the governor’s veto saved a data-center break