AMHERST, Ohio — From a union hall in Lorain County, Chuck Brooky’s been watching battles over data centers play out across the state.
As a labor leader who spent decades building everything from roads and bridges to chemical plants, he’s seen plenty of development fights. And he understands why there’s pushback against these increasingly huge computing hubs, which seem to be popping up almost overnight, gobbling up sprawling properties and using vast amounts of electricity.
But in this brawl, Brooky’s siding with big tech.
"As far as building goes, the way our economy is right now, in the rural areas, we’re struggling. We’re just kind of scraping by,” said Brooky, president of the North Central Ohio Building & Construction Trades Council, which represents laborers in 11 counties. “So when I hear of a data center coming into town, it’s a good thing for us. … Because we don’t have anything else.”
Now construction groups are urging lawmakers to keep a lucrative state sales-tax exemption for certain data centers — joining hands with mammoth tech firms and powerful business groups.
There’s a bipartisan push in the General Assembly to scrap that incentive, which gives companies a discount — or, in some cases, a total pass — on the state and local sales taxes they’d otherwise pay on purchases of data-center equipment and building materials.
“I think this is one of the worst tax breaks that Ohio currently has,” Sen. Kent Smith, a Euclid Democrat, said during a recent interview. “I mean, this tax break is going to billion-dollar tech companies that, quite frankly, don’t need it.”
Critics like Smith, who is co-sponsoring a bill to stop offering the incentive, believe data centers will keep coming to Ohio — with or without a sales-tax break. He also thinks taxpayers aren’t getting enough of a return from facilities that often employ only a few dozen people.
Advocates, meanwhile, point out that 37 other states now offer sales-tax exemptions for data centers. The discussions about ending Ohio’s program already are having a chilling effect, said Dan Diorio, vice president of state policy for the Data Center Coalition, a trade group.
“It’s an important consideration for the data-center industry. And I think it would be devastating for Ohio’s economy if they were to get rid of that sales-tax exemption,” he said, predicting that developers will simply shift their projects to other, nearby states.
The debate over tax breaks
Ohio has become one of the top states for data centers, driven by a flurry of major development in the Columbus area. There are more than 200 of the facilities here already, ranging from modest buildings on corporate campuses to shared data-storage buildings to giant warehouses designed and built for major tech firms, including Amazon, Google and Meta.
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Now, as development proposals spread across the state, some Ohioans are pushing back, particularly in rural areas. This month, a group called Ohio Residents for Responsible Development started collecting signatures to put a constitutional amendment on the ballot to ban the construction of large data centers, measured by their power needs.
State lawmakers are weighing a slew of bills to put some guardrails on the industry, along with a proposal to create a data-center study commission. And the sales-tax break has become a bipartisan target of scorn, from Columbus to Washington, D.C.
"I’ve had many conversations with companies that want to come to Ohio to build data centers,” U.S. Sen. Bernie Moreno, a Republican, said during a recent interview with News 5. “And said here’s the deal: Number one, you’re not gonna take a center of taxpayer dollars.”
Last year, the Republican-dominated General Assembly tried to end the exemption for new projects as part of a state budget bill. But Governor Mike DeWine vetoed that move, pointing to the state’s attempt to transform its economy and compete for high-tech jobs.
In his veto message, DeWine also highlighted billions of dollars in construction work.
Most of that construction is in central Ohio so far. But Brooky is starting to see the impact much closer to home.
In Perkins Township, next door to Sandusky, more than 300 tradespeople, from pipefitters to electricians, carpenters and sheet-metal workers, are working on a massive project.
It’s the roughly $200 million first phase of a campus for Aligned Data Centers, which is remaking a former industrial site. “A little bit of every trade is in there,” Brooky said. “And they’re workin’ seven days a week, 12 hours a day.”
In September 2023, the Ohio Tax Credit Authority approved a 15, year, 75% sales-tax break for the Aligned project. At the time, the estimated value of that exemption was $10.2 million.
The first data-center building is expected to create 18 full-time, long-term jobs.
But Brooky said that’s not the full employment picture. And he’s tired of hearing construction jobs get dismissed as temporary work.
“All of us have kids that go to school in those areas,” he said. “All of us pay taxes in those areas. … We actually live there permanently. So we’re just not really a temporary job.”
Tricky math for Ohio taxpayers
It’s difficult to calculate how much we’re spending on data-center incentives.
From 2017 to 2024, Ohio provided $2.5 billion in tax incentives to attract and expand data-center projects, according to estimates included in a September report produced for the Ohio Chamber of Commerce Research Foundation.
Those incentives include the state sales-tax break on equipment and building materials; local property-tax breaks; and state job-creation tax credits for companies, including Amazon.
The report’s authors found that data centers generated $5.2 billion in state and local tax revenues during the same period. That means Ohioans got back a little more than $2 for every dollar that they spent.
Still, taxpayers are investing about $1 million for every job inside a data center. The sales-tax break, which typically applies to 60% to 70% of a project’s costs, is most of that.
“They can go ahead and develop these data centers. But they don’t have to do it with our money,” said Zach Schiller, research director at Policy Matters Ohio, a nonprofit policy research institute with an office in Cleveland.
“We have a need for those dollars. This is not free money,” he said, pointing to cash-strapped public schools and families who can’t afford childcare.
The Ohio Tax Credit Authority, a five-member board picked by the governor, the Ohio Senate president and the Ohio House speaker, has approved 20 sales-tax exemption deals since 2014, according to records from the Ohio Department of Development.
The projects span everything from a data center at Progressive Corp.’s headquarters campus in Mayfield Village to deals driven by tech titans like Microsoft. Collectively, the tax breaks have an estimated value of about $553.5 million, based on the initial approvals.
But the true value of those deals, which last for at least a decade, is probably much higher. Data centers frequently replace server equipment every three to five years — making them eligible for sales-tax breaks on new hardware purchases.
And some of the winning projects have grown — a lot.
Take Amazon, which pledged to invest $1.1 billion in Ohio data centers in 2014, when the company received the tax credit authority’s approval for a 100% sales-tax exemption for 15 years. The Ohio Department of Development says Amazon has now invested more than $34.4 billion in data centers here.
It’s unclear how much of that spending qualifies for the sales-tax break.
The Ohio Chamber’s research report says Amazon Web Services is eligible for up to $1.54 billion in tax breaks through 2055. The company qualifies for supersized incentives for job creation and spending as a designated Ohio “megaproject” — one of only six in the state.
A development department spokesman referred questions about the current value of the data-center tax breaks to the Ohio Department of Taxation. Citing taxpayer privacy, a tax department spokeswoman would not provide information about individual companies.
The state’s latest tax-expenditure report shows Ohio is expected to forgo more than $140 million in revenue from the data-center exemption during the current fiscal year.
Schiller believes that number is a big underestimate.
“I think that the actual cost is considerably greater,” he said. “But even $140 million a year, that’s just the state. That doesn’t count what localities and transit agencies are also losing.”
The statewide sales-tax rate is 5.75%. Counties and regional transit authorities can tack on an additional 3%. Cuyahoga and Franklin counties have the highest sales-tax rates in the state, at 8%. Lorain and Stark counties are at the low end, with a rate of 6.5%.
'The tech revolution'
Moreno recently blasted a sales-tax break awarded to Ark Data Centers, a company backed by a global private-equity giant, for expansion projects in Independence and Akron. Ark stores and manages data for customers, including healthcare systems and manufacturers.
The tax credit authority approved a 50%, 10-year exemption for Ark, which expects to spend $136 million while preserving 27 jobs and creating 10 more. The tax break is worth an estimated $4.5 million.
“That’s absolutely, patently absurd,” Moreno said during an interview, adding that Ohio should be using that money for education, workforce development and trade-school programs instead.
“When you see Bernie Moreno and Policy Matters get on the same page on an issue, maybe that’s a sign that Columbus should do something,” said Smith, the Democratic state senator trying to kill the tax break for future projects.
His legislation, Senate Bill 374, is co-sponsored by Sen. Louis Blessing, a Hamilton County Republican. It was introduced on March 11 but hasn’t had a hearing yet.
In the Ohio House, Speaker Matt Huffman has talked about mustering enough votes to override DeWine’s veto — the pen-stroke that preserved the tax break last year. But it’s not clear if there’s enough support for an override. That vote would have to happen this year.
On March 9, the data-center industry, business groups and construction organizations sent a letter to Huffman, urging him to leave the tax break alone. They noted that the exemption is discretionary. It's not awarded to every data-center project.
“Over the last year alone, data center companies have announced nearly $20 billion of investment in the state,” the letter said. “These investments are essential to positioning Ohio as a leader in the 21st century economy.”
Getting rid of the tax break would cause data-center investment to fall by about 35% over a 5-year period, according to the report commissioned by the Ohio Chamber.
Instead of scrapping the incentive, consultants working with the chamber said Ohio should require better reporting on jobs, wages — and the actual value of the tax breaks. They also suggested that the state cap incentives, to avoid open-ended deals; set minimum pay requirements for data-center workers; and create a mechanism to automatically claw back public money if companies fail to deliver.
Even if lawmakers eventually scrap the incentive, existing tax-exemption agreements will run their course. A change in state law would only impact new projects.
“Amazon is gonna keep getting it. And so will Google. And so will Meta,” Schiller said.
From his seat at the union hall, Brooky is paying attention — and hoping lawmakers can find a solution that won’t stop the construction boom.
“I think with a lot of education, and a lot of legislation, if we work together, these are gonna be good things for us in the future,” said Brooky, whose stance on data centers — and the need for development — can make for tough discussions with his neighbors in rural New Russia Township.
“Years ago, we had the industrial revolution. Now we have the tech revolution,” he said. “And it’s here. And we need to embrace it.”
Michelle Jarboe is the business growth and development reporter at News 5 Cleveland. Follow her on X @MJarboe or email her at Michelle.Jarboe@wews.com.
