A new analysis from the nonprofit watchdog Good Jobs First finds that at least 14 states and numerous local governments are failing to disclose how much revenue they are losing through tax abatements tied to data center development. These omissions, the group claims, violate accounting standards that require governments to account for such losses in their audited financial statements.
Historically, state and local governments have granted significant tax concessions to attract investment from data center developers, which over the decades have promised jobs and long-term tax revenues.
What has changed, according to the report, is the scale. Incentive programs designed before the AI era are now being applied to projects of far greater size and cost. The resulting revenue losses have grown sharply in recent years. In states that do provide full disclosure, the figures are vast: Georgia, Virginia, and Texas each report annual losses exceeding $1 billion.
Most states do not include these figures in their audited reports, known as Annual Comprehensive Financial Reports. Instead, some rely on less formal documents or do not publish estimates at all.
Down at the local level, transparency is more limited. Many municipalities and counties, some of which face revenue impact, do not report losses associated with tax incentives granted by state governments. The result is an incomplete picture of how much public revenue is being lost to support private data center projects.
Hundreds of Millions of Dollars
North Carolina has spent nearly two decades using targeted tax exemptions to attract major tech companies, helping to establish a corridor of data centers in former manufacturing regions. Google, Apple, and Meta have built facilities there, with additional projects planned by Microsoft and Amazon.
But state officials acknowledge that they lack a precise accounting of the total cost of these incentives. Estimates suggest that current tax breaks amount to tens of millions of dollars annually, with still higher projections as new projects come online. If all planned developments proceed, annual tax relief could reach hundreds of millions of dollars, with additional costs tied to equipment purchases during construction.
In response, Governor Josh Stein has called for a reassessment of the state’s incentive structure, noting that the earlier conditions under which the policies were created are far different from today’s environment, with enormous hyperscaler facilities built for AI workloads.
Supporters of the incentives, in some cases local officials, argue that data centers bring long-term investment and can bolster local tax bases, particularly through property taxes. Critics, often citizen groups, counter that the facilities create few permanent jobs and impose major demands on infrastructure, with meager overall return on investment.
Call for Transparency
Even as doubts are raised about total return, states continue to compete aggressively for data center projects, with dozens offering tax incentives aimed at huge facilities. But public unease is growing, driven by concerns over environmental impact and higher utility bills.
In some cases, opposition has led to policy action. As reported in Techstrong.it, lawmakers in Maine recently approved a moratorium through 2027 on new data center developments, with a goal of reconsidering the terms of expansion.
For Good Jobs First, the immediate goal is transparency. The group is calling on states and municipalities to comply with established accounting standards by fully reporting revenue losses tied to tax abatements, including disclosures for previous years.
