Good Jobs First on the hidden costs of datacenter tax breaks

Greg LeRoy, founder of Good Jobs First, joined the America's Work Force Union Podcast to discuss the trend of states losing billions in tax revenue to datacenter incentives, the potential impact on utility rates and the lack of incentive transparency in many states.

LeRoy explained that 10 states are already losing over $100 million in revenue annually to datacenter tax abatements, with some states, including Texas and Virginia, approaching $1 billion in annual tax revenue losses. He noted that as datacenters grow larger and more expensive, states are hemorrhaging far more tax revenue than initially anticipated through sales and use tax exemptions on equipment purchases. This trend is particularly concerning as federal fiscal changes set in, potentially forcing states to compensate for lost revenue through cuts to essential services.

The discussion also touched on the hidden costs of datacenters' massive electricity consumption. LeRoy warned that utility companies might pass on the costs of new generating capacity to ratepayers, potentially leading to higher electricity bills for small businesses and working families. He noted that in many states, the discounted electricity rates negotiated between utilities and datacenters remain secret, obscuring the true extent of this burden shift.

LeRoy expressed frustration with the lack of transparency regarding datacenter incentives in many states. Of the 32 states examined, he said 12 failed to provide basic aggregate data on revenue losses. LeRoy argued that this lack of disclosure violates accounting rules and hinders proper public scrutiny of these incentive programs. LeRoy emphasized the need for greater accountability and suggested that coalitions of activists, labor organizations and investigative journalists are working to challenge these opaque practices.

For more from LeRoy and Good Jobs First on the hidden costs of datacenter incentives, listen to the full episode above.