Georgia lawmakers attempted to rein in tax breaks for businesses this year, but their efforts were ultimately unsuccessful. Gov. Brian Kemp vetoed a bill that would have paused a sales tax exemption for building and equipping computer data centers. The governor cited concerns about the impact on businesses that had already made plans utilizing the exemption, stating that a sudden freeze would undermine investments and job development. This move highlights the challenges of eliminating established tax breaks, as they often come with a self-interested lobby of supporters.
The debate over tax breaks for data centers is not unique to Georgia, as similar battles are taking place in other states like Virginia and Arkansas. In Georgia, there are concerns about the proliferation of data centers and their impact on the power grid, leading to the need for new electrical generation capacity. Environmental groups are also raising alarms about the potential increase in fossil fuel emissions and water usage associated with data centers. Critics argue that granting tax breaks to data centers without considering their environmental and financial impact is shortsighted.
The vetoed bill in Georgia was part of a broader effort to review and potentially limit tax breaks offered to various industries in the state. While the data center tax exemption was the only bill that advanced, lawmakers had previously abandoned an attempt to cap the $1.35 billion spent on income tax credits for movie and television production. The failure to address these tax breaks raises questions about the long-term goal of further cutting Georgia’s state income tax rate, as policymakers seek to find ways to offset potential revenue losses.
The state’s reliance on data centers has led to a strain on the power grid, prompting Georgia Power Co. to expedite the construction of new generating capacity. Despite assurances that new users will cover the cost of additional capacity and lower bills for other users, concerns remain about rising electrical costs and environmental impacts. Efforts to create a committee to study the impact of data centers on the grid were included in the vetoed bill, suggesting that lawmakers may revisit this issue in the future.
Senate Finance Committee Chairman Chuck Hufstetler, a Republican who has been at the forefront of scrutinizing tax breaks, expressed disappointment over the failed attempt to address the data center tax exemption. He emphasized the ongoing need to evaluate and potentially eliminate new tax breaks to ensure fiscal responsibility. While the vetoed bill may have stalled progress in reining in tax breaks, lawmakers remain committed to addressing these issues in the future and finding a balance between economic incentives and financial responsibility.
