The Alabama Legislature is close to final passage on a bill to reduce tax abatements for large data centers locating in the state.
The Alabama Senate and House last week unanimously passed companion bills to lessen sales and use tax abatements on centers from 30 years to 20 years.
While lawmakers say they welcome the massive facilities that store electronic data critical to online consumption, they do consume a large amount of water and energy and should be treated differently than other industries the state is targeting with its incentives.
“Alabama’s incentives for data centers are about, we think, 15th in the nation,” Senate Bill 265 sponsor Sen. Andrew Jones, R-Centre, said on the Senate floor Thursday. “(That’s a) little too sweet for my taste, maybe for some of you as well. These data centers. They suck up a lot of energy, use a lot of power. There’s only so much (energy) to go around, supply and demand. What happens if we don’t have enough? Costs go up.”
Lawmakers this session have introduced several bills they hope will result in lower power bills for Alabamians, including some reorganizing the state’s Public Service Commission.
“Data centers are a huge piece of this puzzle,” Jones said.
Also under Jones’ bill, starting Jan. 1 of next year, large data centers — those with 100 megawatt or more peak demand — lose state construction tax abatements once the facility is placed in service.
They will be allowed to continue the exemption of sales and use taxes on operational IT equipment that must be refreshed regularly due to technological upgrades.
The House version of the bill by Rep. Leigh Hulsey, R-Pelham, passed that chamber unanimously last week.
Senate Majority Leader Steve Livingston, R-Scottsboro, spoke favorably of the data center located in Jackson County and the good jobs it provides. He offered an amendment that would allow the state to keep the 30-year abatements. Jones opposed the amendment and his colleagues voted it down.
Sen. Sam Givhan, R-Huntsville, successfully added an amendment to honor and protect existing agreements for incentives with data centers.
The bill does not impact the state’s two largest economic incentives, the Jobs Credit and Investment Credit, which can be offered to data centers. It also doesn’t impact local governments’ ability to entice potential centers.
Sen. Merika Coleman, D-Pleasant Grove, spoke of the controversy and concern about a large center moving into her district.
She suggested that in the future, data center developers be encouraged to locate them in brownfields, former industrial sites the state is trying to repurpose.
“I want to ensure that if we incentivize these folks, they are good community partners in the long haul,” Coleman said.
The Senate also voted 30-0 in favor of Senate Bill 270, by Sen. Lance Bell, R-Riverside. It would require data centers, not their neighbors, to pay for the additional electricity they’ll require.
“We want to make sure any increases are not put on the backs of customers already in the area,” Bell told Alabama Daily News. “These are billion dollar companies, and they should pay their own way.”
A House version of the same bill by Rep. Neil Rafferty, D-Birmingham, is awaiting a vote there.