LANSING– Advocates raised the alarm this morning about legislation currently advancing through the Michigan State Legislature which would exempt new data centers from paying sales and use taxes in Michigan. SB 237 passed the Michigan Senate on Thursday and SB 238, the other bill in the package, is expected to be up for a floor vote early this week. The data center tax exemptions raise an important question about exactly what kind of development and investment we need in Michigan.
Data centers are large users of both electricity and water. In fact, large data centers commonly require between 1 and 2.5 million gallons of water daily in their evaporative cooling systems. The energy usage from data centers is also cause for concern. In several states, the development of new data centers is increasing reliance on polluting fossil fuel sources like coal. The increased energy use anticipated from data center development in Michigan could be enough to trigger the off-ramps in the 2023 clean energy legislation and prolonging our reliance on climate change inducing energy sources. Further, data centers often don’t deliver on the jobs and investments that they promise.
“In 2016, when Nestle wanted to take 576,000 gallons of our water each day, tens of thousands of Michigan residents spoke up in opposition. Just one large data center would take between two and five times as much water as Nestle, and these evaporative cooling systems are not capable of reusing the water or returning it to the ecosystem”, said Clean Water Action Michigan Director, Sean McBrearty. “Our water belongs to the people, and our state lawmakers have a duty to protect our water - not to give it away, along with tax breaks, to Silicon Valley billionaires.”
“This bill represents the same old business as usual approach that got us into the climate crisis, and it will fail to attract young talent to Michigan if we do not take climate and justice into account,” said Dr. Denise Keele, Executive Director of the Michigan Climate Action Network. “Data centers are one of the most energy-intensive building types, consuming 10 to 50 times the energy of a typical commercial office building, and as we have seen in other states, their huge energy demand will be used as an excuse to return to carbon polluting sources like oil and gas. Providing tax incentives to these corporations without any guardrails to address energy sources undermines Michigan’s recent renewable energy legislation and poses an imminent threat to our ability to protect the very air, water, climate, health, and workforce that attracts these companies to Michigan in the first place.”
“States across the country start to experience growing issues with data center subsidies. Not only those projects create a relatively small number of jobs, but data center subsidies cost states more and more revenue,” said Kasia Tarczynska, Senior Research Analyst with Good Jobs First. “With the recent introduction of artificial intelligence to the public, the data center industry has been experiencing an unprecedented growth, meaning those facilities will be built, with or without public subsidies. Michigan taxpayers would be better off if the data center tax exemption program was not extended and if data center companies were paying the taxes they owe, taxes that residents and small businesses already pay.”
Mikal Goodman, City Councilmember in Pontiac added, “I stand firmly against legislation that prioritizes corporate interests over the well-being of our communities. The push to exempt new data centers from taxes not only jeopardizes our environment by increasing the perceived need for fossil fuel energy production but also undermines essential resources like water and energy. When we have people in our communities struggling to access water, it's deeply concerning to see it freely given away to corporations to be destroyed for profit unnecessarily . Moreover, these data centers would exacerbate existing burdens on overburdened and over polluted communities where they would be located. The promise of jobs often touted with such developments, like the ones being dangled in front of us now, rarely materializes into meaningful opportunities for our citizens, leaving our coffers drained and our needs unmet. We must prioritize investments that truly benefit our communities, not those that only serve corporate bottom lines.”
“Michigan’s schools are 4.5 billion dollars underfunded each year yet we continue to cut revenue for the wealthy and corporations in Michigan. Education was noted as one of the most important factors to grow our state in the recent Growing Michigan Together report. We have $7 billion dollars less revenue in Michigan as percent of personal income than in 1978. We’re also 49th in population growth since 2020. What we are doing is not working to fix the roads, schools or our water systems. Detroiters keep being promised that big tax breaks for Hudsons, Little Caesars and Bedrock are the ONLY way to bring new jobs. Yet, every time we give them the money, the jobs don’t come. Michiganders deserve good jobs without giving away the revenue needed for our schools and communities. These corporations - with the right regulations and accountability to the community - should come without taking away key revenue from our communities. If we’re serious about helping Michiganders, we must invest in our future by raising the 4.5 billion needed to grow our schools NOT shell out tax breaks to big corporations,” concluded Molly Sweeney, of 482 Forward, Michigan Education Justice Coalition, and Fund MI Future.
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Since our founding during the campaign to pass the landmark Clean Water Act in 1972, Clean Water Action has worked to win strong health and environmental protections by bringing issue expertise, solution-oriented thinking and people power to the table. Clean Water Action has over 135,000 members across the state. Through direct advocacy and education we organize Michigan residents to protect the Great Lakes and our water resources. Learn more at www.cleanwater.org/mi