BELL COUNTY, Texas (KXXV) — Texas lawmakers are reevaluating a sales tax exemption for data centers as the number of facilities and the cost of the breaks have grown far beyond original projections, and Bell County commissioners are also examining their own tax abatement policies.
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Lawmakers are taking a new look at a sales tax exemption given to data centers on their manufacturing equipment. Brad Reynolds with the Texas Comptroller's Office said the state estimated it would add 12 more data centers from 2024 to 2030, but that number doubled.
"The estimates early on were too low to begin with and of course never anticipated the kind of rapid development in numbers and scale that we see today," Reynolds said.
Texas now ranks second in the nation for data center capacity, while the state and local communities, including Bell County, are weighing the costs and impact these centers may have.
State Sen. Joan Huffman said the exemption looks very different now than when it was first approved.
"At the time it passed pretty overwhelmingly, but the information we were given, which you'll hear about today has completely changed. So what we thought we were voting for, uh, back in 2013, um, is, it's, it's a much different animal these days," Huffman said.
State Sen. Bob Hall raised concerns about the burden the exemptions place on residents.
"Shifting the burden of the tax money that's needed to the citizens by giving these tax exemptions whether it's for sale or for sales tax or property tax," Hall said.
Reynolds agreed with that assessment.
State Sen. Paul Bettencourt pointed to how quickly the financial impact has grown.
"It just shows you that, um, uh, how fast the technology has changed because we literally passed a bill in 2015, which is 11 years ago, that had a $15 million fiscal note. With everything that's changed, uh, the exemptions are in the billions of dollars," Bettencourt said.
Locally, Bell County commissioners are continuing conversations around their tax abatement policy to put more safeguards and oversight over data centers. State leaders plan to file legislation, which is among the issues expected to come up when the next session begins in January.
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