Gov. Ron DeSantis has branded himself as one of the country’s leading skeptics of data centers, arguing that regular people should not bear the brunt of higher electricity bills or scarcer water because of the industry’s hunger for resources.
“You should not, as a hard-working Floridian, have to subsidize some of the wealthiest companies in the history of humanity,” DeSantis said when he signed a data center consumer protection law in May.
But for years, Florida has granted a sales tax break to data centers, saving them millions of dollars that would have otherwise gone into state coffers. The exemption lifts taxes on the data centers’ construction materials, technology — even their electric bills.
The tax break originated in a bill passed by Tallahassee lawmakers in 2017, when data centers were an emerging industry that had not yet morphed into a political lightning rod. But last year, lawmakers renewed the exemption — and changed the requirements so that only the largest hyperscale data centers of at least 100 megawatts would qualify.
According to the lawmaker who sponsored that bill, it was DeSantis who pushed for the renewal.
“That came from the governor’s office,” said Rep. Wyman Duggan, R-Jacksonville, who leads the House Ways and Means committee and serves as the speaker pro tempore. He also said Alex Kelly, the secretary of the Florida Department of Commerce, met with him to push for the tax break.
“They pivoted so hard this year” on data centers, Duggan said. But at the time, “it was in (DeSantis’) budget and his commerce secretary came and met with me about it, so it was obviously important to them.”
DeSantis’ office did not respond to emails requesting comment.
The consumer protection law the governor signed puts guardrails on data centers’ electricity and water use, though lawmakers weakened other protections before it passed, such as removing a ban on government officials signing nondisclosure agreements with data center companies.
Polling shows that public opinion has rapidly soured on data centers, and Floridians of all political stripes have organized against them in recent months.
Several of those residents said they were outraged upon learning about the tax break from a Tampa Bay Times reporter.
“It’s disgusting,” said Raul Alfonso, a Polk County resident who’s been leading a grassroots effort to oppose a 1,200-megawatt data center slated for his small town of Fort Meade.
“It just feels like a betrayal from our government leaders that they would do that,” he added, though he said he wasn’t entirely surprised.
County leaders gave the Fort Meade data center a 90% break on its property taxes, exempting the company from paying an estimated $140 million.
The origin of the exemption
When Florida’s data center tax exemption became law, it was sponsored by the House Ways and Means committee, whose members included a young legislator named Byron Donalds. He is listed as a co-sponsor of the bill in state records.
Donalds is the front-runner for the Republican nomination for governor, in a race where data centers have become a flash point. A pro-artificial intelligence super PAC funded by industry heavyweights pledged millions in support for Donalds, prompting criticism from his rivals.
The Donalds campaign noted that the 2017 bill contained a long list of tax policies beyond the data center exemption.
“This 2017 bill was a broad tax relief bill, and as Governor, Byron will continue working to cut taxes for Floridians at every opportunity,” campaign spokesperson Skylar Swanson said in a statement. “He will put Floridians first by requiring tech companies to supply their own power demand for any potential AI data center, putting ironclad taxpayer rate protections in place, and protecting Florida’s water resources from abuse.”
The tax break, which applies to both sales and use tax, was set to expire in 2022. But state leaders extended the deadline twice, including in 2025, at DeSantis’ urging.
DeSantis originally wanted the exemption to be made permanent, according to his office’s budget proposal last year. But lawmakers compromised, Duggan said, by extending it through June 2037 and raising the size threshold so small data centers would no longer qualify.
This modified tax exemption was estimated to cost the state $61.4 million in its first year, according to staff revenue impact figures Duggan shared with the Times.
By 2030, as the industry booms, the state is expected to lose out on more than $230 million that fiscal year alone.
Duggan said the budget reflected DeSantis’ priorities.
“The budget is a policy statement, so the fact they wanted to make that permanent was a policy choice,” he said. “So we accommodated it — in part.”
Three companies received tax breaks
Three companies have received exemptions from the state Department of Revenue, the agency told the Times. To get the sales tax exemption, the companies had to submit an application verifying they met certain requirements, including making “a cumulative capital investment of $150 million or more.”
The companies are Iron Mountain, a New Hampshire-based information management company; Metrobloks, a Los Angeles data center developer; and TensorWave, an AI company from Nevada. All three listed data center properties in Miami, with Metrobloks naming several.
The companies did not respond to emails requesting comment.
James Sutton, a Tampa lawyer specializing in sales tax audits, said this break for data centers is similar to how Florida treats other industries it wants to attract, like manufacturing.
“At $150 million-plus, that’s a lot of additional economic activity in Florida both on construction and the job phase,” he said, adding that builders of data centers will spend locally at restaurants and stores.
But the people living next to data centers are less convinced of their economic benefits — particularly when it comes to bringing long-term jobs.
The “AI-ready” Iron Mountain data center, called MIA-1, is under construction in Westview, a predominantly Black community in northern Miami. The local economic development group estimated it would bring 30 jobs, the Miami Herald reported.
Residents there said they didn’t learn it was coming until it was too late to do anything about it, and they worry about how potential air and noise pollution will affect their quality of life. The dearth of information has made them wonder if local officials signed nondisclosure agreements.
Vanessa Woodward Byers, president of a neighborhood association in the area, said hearing about the sales tax break made her feel “violated.”
“You have to understand, I am an almost 70-year-old Black woman born in the Panhandle of Florida who has seen a lot of things in my life,” she said. “Why are we still doing this? … Who is really looking out for everyday citizens in this state?”
Amy Dawkins, who lives less than 1,500 feet from the data center, said it was ironic that the company would get a break on taxes on its power bills while she worries about how her electric bills could be impacted.
Although the state law requires utilities to charge data centers for all their electricity costs rather than pass them onto residents, it only applies to warehouses with a peak load of at least 50 megawatts. Because the Westview data center is 16 megawatts, neighbors worry about the impact of that rising demand inching onto their bills.
“It’s not this major corporation that’s going to hire people and bring them closer into the middle class,” Dawkins said. “What warrants you getting all of these incentives?”
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