With the legislative session nearing an end, a proposed economic development incentive for data centers doesn’t appear headed anywhere this year.
Legislation exempting data centers from state and local sales taxes for at least 30 years and possibly indefinitely will not survive this session, key lawmakers said.
The proposed tax incentives advanced out of committees in the House and Senate but have idled in recent days and weeks.
The bill was moved out of the House Commerce Committee on Feb. 14 and wasn’t acted on.
A similar bill moved out of the Senate Commerce Committee on March 26 and hasn’t been acted on by the full chamber.
Republican state Rep. Sean Tarwater, chair of the House Commerce Committee, said the incentives for data centers are now overshadowed by the larger debate over tax cuts.
“Everybody’s mind is on this tax plan right now,” Tarwater said. “I don’t know that it’s helping matters.”
House Speaker Dan Hawkins said in an interview that he thought the bill wouldn’t make it this year, but that it would be looked at again next year.
“It’s a pretty good amount of money,” he said.
The exact cost of the development incentive was unknown because it’s not clear yet what kind of data center would move here or how many people it would employ.
Supporters said the bill doesn’t give away tax dollars so much as it forfeits sales tax dollars that would be spent in Kansas.
Critics say data centers don’t employ enough people – maybe anywhere from 20 to 100 people – to make the incentives worthwhile.
The bill was backed by NetChoice, a trade association of online businesses including Amazon, Google, Yahoo, Ebay and Meta, the parent company of Facebook, among others.
The bill would require a data center to create at least 20 new jobs within two years of when it started operations.
The exemption could last from 30 years to indefinitely, depending on the size of the investment.
The exemption would last 40 years for an investment of at least $800 million and indefinitely for an investment of at least $1 billion.
Data centers are locations where computing and network equipment are stored for processing and distributing large volumes of data.
Data centers are what enables the “cloud” where Americans store their photos, videos and documents.
Two years ago, the city of Kansas City, Missouri, approved $8.2 billion in tax incentives for a data center campus north of Kansas City for Facebook’s parent company, Meta, which indicated it would invest $40 billion in the project.
Scheduled to open this year, the Meta data center will support up to 100 jobs and is the first of its kind in Missouri, according to KMBC news. During construction, the project is anticipated to create 1,300 jobs.
Last September, the company announced the completion of its first building.
There are more than 20 states that offer some kind of tax incentive for data centers, including Missouri, Iowa and Nebraska.
Missouri’s program provides for a 100% exemption for state and local sales taxes over 15 years for new facilities that invest at least $25 million and create at least 10 new jobs. The company would have to pay 150% of the county average wage.
It also offers an exemption for state and local sales taxes for expansion of an existing facility that includes at last five new full-time jobs with average wages at 150% of county average wage. The expansion would have to be a $5 million investment.
