Indiana lawmakers advanced a measure to require data center companies to fork over 1% of their sales tax exemption savings to local governments, sweetening the deal for local officials embroiled in the data center fights sweeping the state.
Though framed as a concession to Hoosier communities, the provision replaced a total repeal of sales tax exemptions for data centers that was initially in the bill before it was gutted in the House utilities committee. It also signals a broader hesitance to tackle data center issues within the Statehouse, even as a growing number of communities have rebuked development efforts.
Perhaps more controversially: Under the bill, developments — including data centers — would be allowed to move forward without any public hearings in some cases.
The House passed House Bill 1333 in a narrow 56-43 vote Feb. 2, sending the legislation to be considered in the Senate.
Local governments have already had a tough time refusing data centers — steel warehouses that contain rows of powerful computers that process and store data, often to power generative artificial intelligence — as property tax revenue on the sometimes multibillion dollar investments have topped the list of revenue streams for some counties. Just 1% of sales tax savings would be additional boon; for example, Amazon’s estimated $4 billion in state sales tax savings for their development near New Carlisle, Indiana, would have provided the local government $40 million.
But critics say data centers are already reaping too much of the state’s good will. In addition to a $4 billion sales tax exemption, Amazon has racked up the promise of an additional $4 billion in property tax exemptions, $55 million in Hoosier Business Investment Tax Credits, $20 million in Redevelopment Tax Credits, $18.3 million in EDGE grants and $5 million from the state’s Skills Enhancement Fund.
For data center skeptics who point out massive energy and water demand that threaten to hike utility bills, subsidies just add salt to the wound. Some larger data centers, like Amazon’s project, require enough electricity to power entire towns while offering minimal permanent jobs. And the process that guides these developments are often criticized for being opaque, with the company and its estimated electricity and water usage often initially cloaked by non-disclosure agreements.
There are more than three dozen large-scale data centers currently operating or planned within Indiana, though grassroots resistance has stymied their growth. At least 14 data center projects have been interrupted after community pushback, including a proposed Google data center in Indianapolis.
Another provision in the bill appeared to address that pushback, allowing local leaders to determine the order and speaking time of public commenters based on if they have a relationship to the area.
‘Radical’ provision nearly tanks the bill
Another aspect of the bill, and a key element of Culp’s mission to protect prime farmland, would clear the way for companies to build on farmland deemed less fertile, which bill author Rep. Kendell Culp, R-Rensselaer described as a “carrot” instead of a “stick” approach to protecting quality soils.
But probing by one lawmaker revealed the current language appears to override local regulations on data centers and other developments.
Rep. Matt Pierce, D-Bloomington, said the language in the bill would allow any project or development, whether it was a data center, oil refinery or solar farm, to be built on agricultural land with unproductive soils without a public hearing and despite any pre-existing local ordinances to the contrary.
Culp confirmed that interpretation was correct and said while he’d considered amending the bill the previous week to make it less broad, that amendment lacked support to pass.
“This is really pretty radical,” Pierce said.
But Culp’s promise to fix the bill in the Senate was enough to squeeze the bill through.
Contact breaking politics reporter Marissa Meador at mmeador@gannett.com or find her on X at @marissa_meador.
This article originally appeared on Indianapolis Star: Will Indiana get more data centers? House passes bill to sweeten the deal for locals
Reporting by Marissa Meador, Indianapolis Star / Indianapolis Star
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