The committee voted to pass House Bill 1192 on Friday. The bill would suspend tax breaks for new data centers while lawmakers consider whether to continue or modify the incentives. The House passed the bill last month by a vote of 96-71. It will now be submitted to the full Senate for consideration.
The sales tax exemption for data centers has only recently been repealed.
Since 2018, Georgia has offered favorable tax breaks to large or “hyperscale” data centers. The law, which mirrors a Virginia law copied by dozens of other states, provides tax breaks for equipment installed within these facilities.
Servers in data centers run 24/7 and require large amounts of electricity to keep them powered. With more facilities in Georgia, Georgia Power, the state's largest utility, says it needs to significantly increase its system capacity to meet demand.
Georgia Power has asked state regulators to allow it to add about 3,400 megawatts of new capacity, about three times the maximum output of a single new reactor at the Voigtl plant. Company executives testified that data centers will carry about 80% of the expected new load.
Microsoft, which operates multiple data centers in Georgia, recently said incentives are an important factor it considers when planning new facilities. However, tax relief is just one of 35 criteria considered, a company spokesperson said.
Despite its massive size, the data center employs only a few dozen people. Data centers are storage centers for computer servers, not people.
Josh Levi, president of the Data Center Coalition, told the committee that Georgia has seen significant investment in data centers since lawmakers re-increased tax breaks in 2022.
“Pausing the program sends the wrong message to all capital-intensive businesses where certainty and predictability are essential,” Levi said.
Local officials in the county where the data center is located said it created thousands of construction jobs and a property tax windfall.
“This is an important part of removing ad valorem taxes from property owners and residents and balancing the tax digest,” said Niki Vanderslice, president and CEO of the Fayette County Development Authority. Ta.
Sen. Jason Estevez (D-Atlanta), a member of the committee, said the goal was to eliminate the tax cuts, but failed to inform potential investors that they would be phased out over time. questioned why the state would suspend tax cuts.
Credit: TNS
Credit: TNS
“During our pause, we're essentially telling investors who made soft commitments that this is it,” he said. “I don't think they want to invest in something that's been suspended and probably on the chopping block.”
But another member of the committee, Sen. Greg Dolezal (R-Cumming), urged local officials to consider losing state sales tax incentives if they want to provide more incentives to attract data centers. He said it could be covered by local sales taxes.
“Why do we have to pay and why can't you?” he asked.
Many counties are offering other incentives to attract data centers, local officials said.
It's unclear how much the suspension will save the state or how much it will cost at this point. The amounts announced at Friday's meeting ranged from more than $10 million to $80 million to $100 million.
Senate Finance Chairman Chuck Hufstetler (R-Rome) said companies that already have data centers under construction or that have received tax breaks from the state will still be eligible for the incentives.
Credit: Natrice Miller/AJC
Credit: Natrice Miller/AJC
“I think there is a way to solve this problem with local help,” Hufstetler said. “We have a potential energy crisis and we have incentives to not do well as a state. I agree that local people are doing very well. If I were still a county commissioner, I definitely would have wanted one of these (data centers).”
Lawmakers who have studied the effectiveness of numerous business tax breaks over the past year remain skeptical of proponents' claims that without the cuts, companies would not build or do business in Georgia. . House Ways and Means Chairman Shaw Blackmon (R-Bonaire) said lawmakers made it easier for data centers in rural Georgia to receive tax breaks in hopes of spurring job growth.
For decades, the General Assembly's leadership has been comprised primarily of local legislators.
“The bar (to qualify for tax breaks) is much lower in rural Georgia,” Blackmon said, “and yet we've never seen data center prices go up.”