CINCINNATI — State senators across Ohio are working on legislation to eliminate tax exemptions for data centers in the state, arguing it is giving away too much to billion-dollar corporations while communities grapple with the environmental impact.
The lawmakers want to end the 100% sales tax exemption on construction materials that data centers currently receive, a benefit that allows companies to build massive server facilities without paying taxes on building supplies.
Ohio state senator Kent Smith (D-Euclid) is leading the effort, alongside his work with Republican Sen. Louis Blessing (R-Colerain Twp.) on data center regulations.
"We've got to do something about the power demands associated with data centers, and we should also pare back this huge tax giveaway that quite frankly is going to billion-dollar corporations anyway," Smith told us.
The push comes as data centers housing thousands of servers that power digital services and artificial intelligence continue expanding across Ohio. The facilities have sparked divisions in communities from Wilmington to Trenton to Mount Orab, where residents have expressed concerns about electricity usage, water consumption and environmental impacts.
Gov. Mike DeWine vetoed a similar measure during budget negotiations, but the debate continues as lawmakers weigh economic benefits against community concerns.
Hear the descriptions of the reforms lawmakers are working on:
On the Republican side, state Rep. Gary Click (R-Vickery) and Rep. Kellie Deeter (R-Norwalk) have proposed establishing a "Data Center Study Commission" to examine the impact of the roughly 200 data centers officials estimate are operating in Ohio.
This bill awaits a number and committee assignment.
Smith said the study proposal doesn't address the immediate need for more reform.
"I feel like this was needed in 2023. So, I don't think we need a study commission right now. I think we need action," Smith said.
The Ohio Chamber of Commerce Foundation released a study showing the data center industry contributed more than $1 billion in state and local tax revenue in recent years, arguing the benefits outweigh energy demands.
"I think we need to give local communities a voice, make sure rate payers aren't getting hosed for the inflated power demand," Smith said.
