Ohio's biggest data centers secured decades of tax breaks

COLUMBUS, Ohio -- Ohio lawmakers are trying to reduce a controversial tax break for data centers, but contracts signed during the Kasich administration leave the state’s largest tech companies largely untouched.

Amazon, Meta and Google all signed statewide agreements between 2014 and 2018 that granted 100% sales tax exemptions for up to 40 years on any facility built in Ohio if the companies met certain investment targets.

“I’m just dumbfounded,” Rep. Tristan Radar, a Lakewood Democrat, said. “This is so poorly designed.”

While the agreements were signed at different times, they all followed the same basic model. According to the contracts, Ohio promised Amazon, Meta and Google a 100% sales tax exemption on data center equipment anywhere in the state. In return, the companies agreed to meet investment and payroll targets.

The deals started with a 15-year tax exemption, but each agreement allowed the exemption to last 40 years if the company invested $8 billion in the state. Amazon’s agreement required a minimum annual payroll of $1.5 million, Google’s required $2.5 million and Meta’s required $4 million.

Unlike most tax incentives, which are tied to a specific project, these agreements applied statewide, allowing the companies to claim the exemption on data centers built anywhere in Ohio.

“Gov. Kasich set this scheme up so that Ohio would be prime ground to develop massively in terms of data center development,” Radar said. “They saw fertile ground and have been taking advantage of us ever since.”

Cleveland.com is seeking comment from Kasich.

A chart of the potential cost of these exemptions, obtained by Cleveland.com, showed each statewide agreement could be worth at least $600 million annually.

Those figures were based on $8 billion in investment, and a footnote warned that “given the uncapped nature of the tax exemption, final numbers could be significantly higher.”

“We might be stuck with this absolutely terrible tax break with no way of repealing it,” Sen. Kent Smith, a Euclid Democrat, said.

Most lawmakers didn’t know about the contracts until they resurfaced in recent days as legislators worked to rewrite House Bill 646, a data center reform bill that would reduce the tax break and require utilities to create special electric rates for the industry’s largest power users.

That discovery will limit how much money lawmakers save.

Amazon, Meta and Google account for roughly three-quarters of Ohio’s data center development, meaning any changes to the tax break will have little effect on the industry’s biggest players.