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Governor vetoes tax breaks for data centers, homestead exemption bump and higher ed assistance

Credit: iStock

by Jill Nolin, Georgia Recorder
May 8, 2024

The governor has vetoed a bill that would have suspended a tax break for data centers for two years, saying it would undermine the business community. 

The bill was pitched as a pause that would allow the state to assess the impact these massive energy consumers have on the grid. The state’s largest utility, Georgia Power, plans to lean on fossil fuel sources to make up the energy shortfall partially caused by these data centers.

The measure would have applied to new applications for a state sales tax exemption as of July 1, and it would have left the perk’s future in the hands of a new special commission on data center energy planning.

That proposal narrowly passed both chambers during the 2024 legislative session, drawing bipartisan opposition from lawmakers with data centers back home and Democrats responding to concerns from labor unions.

In a statement, Gov. Brian Kemp argued state lawmakers extended the sales tax exemption for another three years just two years ago.

“The bill’s language would prevent the issuance of exemption certificates after an abrupt July 1, 2024 deadline for many customers of projects that are already in development — undermining 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,” Kemp said in the statement.

Environmental groups were dismayed by the veto.

“The surge in the demand for power from data centers is propping up old coal plants and causing a rush to build new gas infrastructure,” said Sierra Club Georgia Chapter Director G Webber. “As a result, Georgia communities will see higher levels of air and water pollution, and our fight to curb the worst effects of climate change is hampered.

“Kemp is burying his head in the sand by refusing to address an issue already having such a significant impact on our state,” Webber added.

A group of environmental groups had pressed the governor to sign the bill, sending him a letter last month that argued the measure represented reasonable steps to prepare for the impact of these data centers.

“Giving data centers a tax break without investigating their impact on our environment and bill payers is short sighted,” said Jennette Gayer, executive director of Environment Georgia. “I hope we can revisit this issue in the next legislative session.” 

House Speaker Jon Burns said in a statement Wednesday that his chamber would continue to examine the issue.

“The House made significant progress this year in reducing taxes for businesses and citizens across the state and rebalancing our priorities when it comes to our state’s economic development incentives—ensuring that Georgia taxpayers are receiving the best possible return on investment,” the Newington Republican said.

“We’re going to spend the interim reviewing the incentivization of data centers and studying the long-term impact they could have on our energy and water supply as well as the overall economy—while maintaining our commitment to the businesses currently located in our state,” Burns also said.

The bill was one of a dozen struck down by Kemp Tuesday on the final day for the governor to sign a bill into law. 

This story is republished from Georgia Recorder under a Creative Commons license. Read the original story.