The state would suspend sales tax breaks on new data centers that lawmakers say aren’t giving the state much financial return on its multimillion-dollar investment under legislation the Georgia Senate gave final approval on Thursday.
The Senate voted 29-22 for House Bill 1192, which would suspend the tax break for new data centers while lawmakers study whether to continue or modify the incentive. The House last month passed the bill. The measure now goes to Gov. Brian Kemp for his consideration.
“It’s important to look at the impact of what is happening,” said Sen. John Albers, R-Roswell, vice chairman of the Senate Finance Committee. “The reality is these do not create (many) jobs. They create big buildings, but they do not create jobs.”
However, Sen. Derek Mallow, D-Savannah, said the bill will “pull the rug from underneath” companies planning to build data centers. “That’s not good business. The market does not like uncertainty,” he said
The sales tax break for data centers has only fairly recently become a target for elimination.
Since 2018, Georgia has provided lucrative tax savings for large or “hyperscale” data centers. The law provides tax breaks for the equipment housed within these facilities, mirroring a Virginia law that dozens of other states have copied.
Data center servers run 24/7, requiring huge amounts of electricity to keep them powered. As the facilities flock to Georgia, the state’s largest utility — Georgia Power — has said it needs to significantly boost the capacity of its system to keep up with the demand.
Georgia Power has asked state regulators to allow it to add almost 3,400 megawatts of capacity, equal to about three times the maximum output of one of the new nuclear reactors at Plant Vogtle. Company executives have testified that data centers are responsible for about 80% of its expected new load.
Microsoft, which operates multiple data centers in Georgia, said recently that incentives are an important factor it considers when planning new facilities. However, tax breaks are just one of 35 criteria it takes into account, a company spokesperson said earlier this year.
Despite their mammoth size, data centers employ only a few dozen workers — they’re storage centers for computer servers, not people.
Local officials in counties with data centers said they have generated thousands of construction jobs and provided a windfall in property taxes. Many counties offer other incentives to attract the data centers, local officials said.
It’s unclear how much the suspension would save the state and how much it costs now.
Senate Finance Chairman Chuck Hufstetler, R-Rome, said companies with data centers already being built or who are in the process of having their tax breaks certified would still be eligible for the incentives.
“We do have serious concerns about providing electricity to the companies wanting to come into Georgia,” Hufstetler said.
