Today the MN Senate committee on Taxes heard testimony on MN SF0769: a bill that would modify existing tax incentives for large data centers from refund to tax exemption. The bill is laid over for possible consideration in omnibus tax bill.
Notes (mine), related documents (from presenters) and video below:
From the MN Senate:
S.F. 0769 HauschildCertain data centers tax exemption modification
sf0769(hf1277) Large Scale Data Centers_1
SF769 Virginia Data Center Stats
Full notes:
Sen Hauschild
- A2 Amendment – is adopted.
- MN is exceptional but we need to be competitive
- A diverse economy helps us – we don’t have lows we don’t have highs
- We have taconite and timber – but that’s old school – we need to support upcoming resources
- People don’t know that “the cloud” is a data center – people use the resources and we need to look at how to attract new age technology to stay competitive
- Do we want MN to be competitive to new age technology?
- Data centers attract new wealth
- Data centers create jobs, pay taxes and we have to meet our climate goals
- This bill does two things:
tax changes from refund to up front exemption – the other states already do that
creates a new investment tier and creates a sunset of 2050 - Local governments will reap investments in their increased tax base
Sen Rest
- The revenue estimate is different from each year; last year was unknown. This year is (FY2028) $20 million
Questions:
Q: Will there be increased use of this tax credit?
Can’t say – but it eases the burden
Q: Why the 25,000 sq ft and $25M limitation? Why focus on big only?
TO incentive large scale.
Q: Why big? Will tax exemptions of smaller data centers go away?
Smaller data centers is refundable. So only the large data centers will get un front exemption.
Q: So can all data centers get tax break now?
There are minimal requirements now – at least 25,000 or $30M investment in 4 years and meet certain tech qualifications, such as needing uninterruptable energy.
Q: maybe we need to change that to include smaller places.
Q: On revenue estimate – why do we say $20M?
This is because it makes the tax cut exemption – instead of refundable. Also – there were no proposed data centers that would have qualified last year.
Q: So this makes us more competitive? So $20M is for this one data center only?
Yes.
Testimony:
Barabra Comstock (NetChoice)
- We support. We did this in Virginia and it helped a lot with jobs and local economy
- This is a $100 billion market and not everyone has characteristics that make good data center locations
Bartley Cleland (NetChoice)
- Modernization of data is important to all states. Great for economy.
- Refund to exemption means easier administration
- Neighboring states offer similar options
Q: Do other states only help larger data centers?
The revenue comes in from the very large places. It helps balance the budget.
Andrew Campeau (MN Pipe Trades Association)
- We support it – it means jobs for our members
- We have 174 members on site at Rosemount Project
Joel Johnson (IBEW)
- We need to make sure our regulations and tax rules meet the needs of MN
- Data Centers create jobs and tax revenue
Gavin Hanson (MN Business Partnership)
- We support the bill
- The timing is important because getting reimbursed take a lot of work. Other tax cuts don’t work this way
Zach Martin (MN Power)
- We support the bill
- In rural areas, attracting projects is difficult. Data centers require more modest workforce once built – no more trying to get workers 24×7 with lower population density.
- We are committed to carbon free goals
Q: Do data centers have access to redundant power supplies?
Reliability and affordability are top concerns.
Q: Is there a need for new/more power – such as high voltage power lines?
They are a unique asset for us. We are exploring this as an option.
Tanner Fitsinger (MAPE)
- Does not support
- We are concerns with power expectations – and environmental impacts from water consumption
- Little regard to general fund
- This program could grow to a point of being a detriment to general fund.
Avonna Stark (Clean Water Action)
- Do not support the bill
- We are giving tax cuts to billionaires on the backs of everyone
- We are concerned with the use of water
- In Washington State, they saw tax cuts for data center snowball is a corporate tax giveaway – with little regard for water
Catherine Kauffman (ISAIAH)
- Oppose the bill
- Large data centers use incredible amounts of power and are not flexible – we don’t have power rules to handle their needs. Grid reliability will suffer.
Patty O’Keefe (Vote Solar)
- Opposes the bill
- The problem is the increased demand for energy
- Refunding tax cuts adds to transparency of the funds
- Cut could go from $4M in 2018 to $238M in next biennium
Aurora Vautrin (100 percent)
- Strongly opposed
- We appreciate the definition of large data centers
- Precariousness of federal funds means now is a time when we need more info on what state funds are reaping ROI – tax exemptions will reduce that transparency
Peter Wagenius (Siera Club)
- Oppose bill
- This is an uncapped corporate giveaway.
- We are supporting the largest corporations – not Minnesotans.
- Data centers and subsidy and water hogs
- We need more oversight – not less
Cathy Johnson (Coalition for responsible data center development)
- We aren’t opposed to data centers but these tax cuts are going to corporations outside of MN
- The corporations themselves are saying that tax cuts are not a priority when doing site selections
- We’re worried about increased power needs, sound pollution, water usage
JT Haines (CN Center for Environmental Advocacy)
- We oppose
- This tax rebate has outgrown the budget from $5M exemption in 2018 to much higher in future
- We oppose the lack of transparency
- If we care about water, we need better certification
Kate Lynne Snyder (Education MN)
- We oppose
- Raising tax bases could increase with data centers could mean more money to schools – but only in areas with them.
- Teachers and parents who buy schools supplies get tax refunds NOT exemptions
Sarah Mooradian (CURE)
- Opposing the bill
- When Data centers get refunds they must show purchases and progress toward meeting any compliance. Exemptions would cut out that important check and balance
- Without the exemption – data centers will still get the tax cut – it’s a matter of having to show their work.
Eric Bernstein (We Make Minnesota)
- We are concerned with data centers getting the tax cut without transparency
- This tax credit goes only to one industry – that’s concerning
- The quoted $20M in tax exemption expected in 2028 – is for one company. We have heard of several data centers are looking at MN. That could be a loss of $20M per project in taxes
Mitch Dillenson, citizen (?)
- Hard to take notes – I think he was being sarcastic.
A4 Amendment
- Proposes to subject data centers to more scrutiny and reporting. Data center must report type and amount of metals used in building – and how recycles. Data center (once running) need and environmental review. Including analysis of power and water used. Need certification from DNR on water use. Make sure data centers are located in industrial parks versus residential neighborhoods.
- We need to discuss the amendment more
- It has been withdrawn for time being
Sen Hauschild – final remarks
- MN has a choice to make.
- Carbin is carbon. We have a 2040 carbon goal. These data centers will have to adhere to those plans. Like or not, data centers are the future and you will use it. This is the future and MN should be a part of it. Good jobs are good jobs at least in Minnesota those jobs are union jobs. Tax incentives are tax incentives – but we get the offshoots of these investments.
Last observation: the bill does allow for multiple equations if they are connected by fiber.
Bill is laid over for possible consideration in omnibus tax bill.