ATLANTA — Georgia lawmakers have vowed they will limit tax breaks for businesses this year.
Their efforts were fruitless.
Gov. Brian Kemp on Tuesday vetoed the state’s two-year moratorium on sales tax exemptions for building and equipping computer data centers after a massive lobbying effort to preserve the tax break.
Lawmakers and state experts said Kemp’s veto showed how difficult it would be to eradicate established tax breaks.
“Anytime you make an exception in the tax code, you create a self-interested lobby around it,” said Greg LeRoy, executive director of Good Jobs First, a group that has long advocated for economic development incentives Measures skeptical liberal organizations.
The Republican governor wrote that he vetoed House Bill 1192 because businesses already had data center plans to use the exemptions and that an “abrupt” freeze on July 1 would disrupt “high-tech data center operators, customers and investments made by others”. Stakeholders are relying on the latest extension and inhibiting vital infrastructure and job development. ”
The dispute in Georgia mirrors those in other states, including Virginia, where a growing number of data centers has sparked a backlash, and Arkansas, where lawmakers are moving to impose new restrictions on data centers that mine cryptocurrency.
In Georgia, some are pushing the city of Atlanta to ban data centers near transit stations and Beltline walking trails and to stop offering local property tax breaks on top of state sales tax breaks. Although local jurisdictions benefit from hundreds of millions of dollars worth of investment property taxes, data centers often provide only few jobs.
Freezing the data center tax exemption is the only bill introduced after a months-long review of all tax breaks Georgia offers to industries. Lawmakers earlier abandoned an effort to limit Georgia’s spending on the earned income tax credit used to subsidize movies and movies. TV production.
So many data centers opening or expanding in the state are causing significant drain on the grid that Georgia Power says it will soon need to build or contract for new generation capacity. The International Energy Agency says electricity consumption in global data centers could double by 2026, calling for a focus on efficiency.
Georgia Power said new customers will pay for additional generation capacity approved by the Public Service Commissioner last month, putting downward pressure on other customers’ bills. But others are wary of those claims because of rising electricity costs in recent years.
Environmental groups are among those seeking to limit the tax exemption because Georgia Power’s new plants will use natural gas as fuel, increasing fossil fuel emissions. Environmental groups are also concerned about how much water data centers use to cool computers.
“Giving data centers tax breaks without investigating their impact on our environment and our payers is short-sighted,” Georgia Department of Environment Director Janet Guyer said in a statement.
The bill would create a commission to study the impact of data centers on the electrical grid.
A review of the 2022 sales tax exemption by the University of Georgia’s Carl Vinson Institute of Government projects that the state will give up $307 million more in sales taxes from 2024 to 2030 than it collects from data center construction and operations. For example, the state expects to forgo $44 million in revenue this year but only recoup $13 million from other sales taxes.
The failure also raises questions about Republican Lt. Gov. Bert Jones’ long-term goal to further lower income tax rates for all Georgia residents and businesses. He hopes to increase other tax revenues to offset those cuts.
Senate Finance Committee Chairman Chuck Hufstetler, a Rome Republican who is spearheading the review of the tax break, said lawmakers may revisit the data center tax break next year. He said part of his focus is to prevent the new exemptions from becoming law.
“It’s disappointing that we’re moving so slowly, but as we look at these issues, this is going to be an ongoing process,” Hefstler said. “I think it’s going to be very difficult to get them out.”
This article was generated from automated news agency feeds without modifications to the text.