Companies like Amazon and Facebook would receive millions of dollars in tax breaks for building data centers in Kentucky under a bill that passed out of a legislative committee on Wednesday.
Supporters of the measure say it would lure tech investments to Kentucky. Opponents argue the large and profitable companies don’t need tax relief from the state.
House Bill 379, would exempt businesses that build data centers in Kentucky from sales and use taxes for 30 years. To qualify, they would have to invest at least $150 million and create 20 jobs in the first five years.
Steven DelBianco, lobbyist and president of NetChoice, a trade organization that represents tech giants, said unlike Ohio and Indiana, Kentucky doesn’t have any data centers and its current tax code isn’t competitive enough to lure them in.
“[The] benefits are incremental economic activity, incremental tax benefits and the Commonwealth needs not cut a check, not to do anything but make the state ready for data centers, to be competitive,” DelBianco said.
DelBianco said the measure would allow data centers to avoid the sales tax they would pay to replace servers, which happens every three years, but in return the state would see economic benefits from worker income, spending and local property taxes.
Democratic Rep. Josie Raymond of Louisville, who voted against the bill, said she was skeptical that the tech industry needed any tax breaks to succeed.
“Can you help me understand why this is not just a coupon for Facebook, whose parent company META, if anybody understands what that is, had revenues in 2021 of $117 billion, which is 10 times the general fund of Kentucky?” she asked
Gov. Andy Beshear vetoed a similar measure last year citing the speed with which the bill was passed in the final hours of the legislative session.
The bill defines a data center as any facility that is used to house computer servers for data storage. It also includes a claw back provision that would give the state Department of Revenue discretion to force the company to repay the entire amount plus interest if they fail to meet their requirements.
The latest measure doesn’t have a fiscal note attached, but a similar bill from last session would have cost the state at least $15 million per year, according to the Lexington Herald Leader.
The bill passed out of the House Appropriations and Revenue Committee and now moves to the full house for a vote.