Buckeye Institute urges Ohio against data center bans, calls for tax and utility reforms

The Buckeye Institute wants Ohio policymakers to reject blanket bans on new data centers while requiring developers to pay full local property taxes and bear the infrastructure costs their projects create.

The Columbus-based free-market think tank outlined its recommendations Tuesday in a new policy brief as data centers draw increased attention from state lawmakers and candidates for governor.

“While Ohio policymakers should not dismiss legitimate public concerns about data centers, they should reject moratoriums on their construction,” Aswin Prabhakar said in a release.

Prabhakar said policymakers should instead increase transparency surrounding development agreements, require developers to bear the costs and risks associated with their projects and address specific problems through targeted regulations.

The institute recommends making data center development agreements publicly available, requiring developers to pay their full local property taxes and making large electricity customers pay for the infrastructure necessary to serve them.

“The public and its civic leaders are right to voice concerns about the costs—fiscal and otherwise—created by data centers,” Greg R. Lawson, a senior research fellow at The Buckeye Institute and co-author of the brief, said in a release.

The Buckeye Institute previously urged lawmakers to maintain Ohio’s sales tax exemption for data center equipment while scrutinizing local property tax abatements. Lawson told lawmakers in June that the sales tax exemption resembles an existing exemption for manufacturers, while property tax abatements can shift costs onto residents and other businesses.

Lawson delivered that testimony as lawmakers considered House Bill 646, a broader data center proposal that passed the Ohio House 97-0 in March before undergoing substantial changes in the Senate. The Senate Energy Committee reported a substitute version of the bill June 10 before the Senate recommitted it to the committee later that day.

Data centers have also become an issue in Ohio’s gubernatorial race, with Republican Vivek Ramaswamy and Democrat Amy Acton proposing different conditions for future developments.

Ramaswamy has rejected a permanent ban on data centers while proposing three requirements for future projects: providing free electricity or compensation to nearby residents, paying full property taxes and meeting environmental and farmland protections.

His proposal would use property tax revenues from data centers to fund property tax relief for homeowners and prioritize brownfield and industrial sites over farmland.

“If any one of these three conditions is not met, the data center won’t be built,” Ramaswamy said when announcing the proposal in August.

Ramaswamy has also pledged to issue an executive order on his first day as governor temporarily halting approval of new data center projects until legislation implementing his proposal takes effect.

Acton has proposed a conditional moratorium on data centers that do not meet requirements involving utility costs, union labor, transparency, environmental standards and benefits for surrounding communities.

“As governor, I will take immediate action and support a conditional moratorium on data centers to ensure they cover one hundred percent of their utility costs, exclusively build with union labor, operate with full transparency, adhere to Ohio’s environmental standards, support the needs of local communities, and bring jobs to former industrial areas that have been left behind,” Acton said in a July release.

Acton’s campaign has criticized Ramaswamy’s proposal, arguing it would allow continued data center development and does not go far enough to address tax incentives and development agreements.

The Buckeye Institute’s recommendations overlap with portions of both candidates’ proposals.

Ramaswamy and the institute both call for data centers to pay their full local property taxes, while Acton and the institute both call for developers to bear project-related costs. The Buckeye Institute, however, argues against moratoriums on data center construction.