Michigan is one of 38 states that offers dedicated tax incentives for data centers, and a new report says the public still can’t get a straight answer about what those deals actually cost.
Good Jobs First, a watchdog group focused on economic development incentives, released a study this month finding that 14 states don’t disclose how much tax revenue they lose to data center subsidies. The non-reporting states include Alabama, Arkansas, Idaho, Iowa, Indiana, Louisiana, Maryland, Missouri, Mississippi, North Carolina, North Dakota, Oklahoma, South Carolina and Utah. None of those states publicly report what they’re giving away in sales, use or property tax breaks to attract the massive server campuses.
The numbers in states that do report are startling. Georgia, Virginia and Texas each lose more than $1 billion per year to data center incentives, according to Good Jobs First. That’s billion with a B, annually, in three states alone.
“No form of state spending is more out of control today than data center tax abatements,” Greg LeRoy, executive director of Good Jobs First and primary author of the study, said in a news release. “Hyperscale data centers are not only extractive of electricity, water, and land; they are also undermining public budgets.”
Good Jobs First said most of the non-reporting states are violating standards set by the Governmental Accounting Standards Board, a private organization that sets financial reporting rules for state and local governments. States aren’t just leaving residents in the dark. They’re breaking their own financial disclosure obligations.
What data centers actually are, and why cities keep chasing them
Data centers are sprawling campuses of computer servers, the physical infrastructure behind every app, website and cloud storage service. For local governments, they look attractive on paper: massive upfront investment in construction and equipment, jobs during the build phase, and a big address on the tax rolls.
The pitch works. All 38 states that now offer dedicated data center tax breaks, as tracked by the National Conference of State Legislatures, got there by competing for the same facilities that companies like Amazon Web Services and other hyperscale operators shop to the highest bidder.
But the long-term math is getting harder to defend. Data centers don’t hire many permanent workers relative to their footprint. They consume extraordinary amounts of electricity and water. And when states hand out billions in tax abatements without reporting the losses, school districts, municipal services and infrastructure budgets absorb the gap.
The backlash is building
Local opposition to data centers has accelerated as residents connect rising electricity prices to the facilities’ power demands. In some communities near existing campuses, utility bills have climbed while neighbors report noise from cooling systems and concerns about water use during drought conditions.
State lawmakers are starting to respond. Maine’s legislature approved a moratorium this week on new data centers larger than 20 megawatts, the first statewide ban of its kind in the country. That legislation, which still needs action from the governor, would block new facilities through November 2027 and set up a new state council to evaluate policy and planning tools for handling data center growth, as Michigan Advance reported.
Maine’s move is significant. It signals that the race-to-the-bottom dynamic, where states keep sweetening incentive packages without any public accounting of the cost, can actually be stopped.
What Good Jobs First wants
The report’s core recommendation is straightforward. Every state that hands out data center tax breaks should fully report the revenue it loses, broken down in a way that shows the impact on local tax streams, not just statewide totals. Right now, a township or school district in a state that doesn’t disclose has no way to know how much their tax base has been eroded to benefit a company worth hundreds of billions of dollars.
For Michigan, that accountability question is directly relevant. The state competes for data center investment, and residents in communities that host these facilities have a legitimate interest in knowing what the public subsidy actually costs their local budget. The Good Jobs First report, drawing on Governmental Accounting Standards Board guidelines that already exist, makes the case that disclosure isn’t a new burden on industry. It’s a basic requirement of honest public finance.
The full Good Jobs First report is available through their subsidy tracker database, which logs economic development incentives across all 50 states.
