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Wyoming lawmakers defeat repeal of tax exemptions on data centers
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Wyoming lawmakers defeat repeal of tax exemptions on data centers

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Microsoft data center in Cheyenne to be powered by wind energy

An aerial view of Microsoft’s data center west of Cheyenne.

The Wyoming Legislature’s House Revenue Committee defeated an effort Tuesday to repeal a tax exemption on data centers worth millions of dollars per year after several hours of testimony from economic development professionals and the industry itself.

The bill — which failed by a 6-3 vote — was expected to generate roughly $40.5 million in state and local tax revenues over the next three years, according to its fiscal note, and was seen as part of a larger strategy by state lawmakers to generate new revenue by repealing exemptions in the state’s tax code as opposed to drafting new taxes.

However, the bill was ultimately defeated after a string of state, local and industry officials spoke out against it, citing the competitive nature of the industry and the significant economic activity generated by the construction and operation of those data centers, which are primarily located in Cheyenne. Across the country, roughly 60% of all states offer tax exemptions for data centers as part of economic incentives packages, which are considered an integral component of being able to attract those businesses into the state.

In testimony to lawmakers, officials from the Wyoming Business Council, Cheyenne’s economic development community as well as the city’s mayor, Patrick Collins, spoke against the bill, arguing the benefits of that tax incentive far outweigh the revenues potentially generated by repealing the exemption.

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Betsey Hale — CEO of Cheyenne economic development arm Cheyenne LEADS — said her region’s four data centers have so far amounted to $1.5 billion in capital investment since 2010 and growing. Combined, all four data centers generate an estimated $82 million to the state’s GDP in direct and indirect economic activity every year, support 140 vendors, and have paid $40 million in property taxes and $18.8 million in sales taxes since they’ve been constructed.

By repealing that tax exemption, Hale said Wyoming could hinder its attractiveness in a highly competitive space. Last week, Hale said she mentioned the possibility of the state eliminating the data center tax exemption to one prospect looking at bringing a 1-million-square-foot project to the region, only to be told they have “five other states” they could take the project to and receive additional incentives on top of the data center exemption.

“Had the incentive not been in place,” Brian Heithoff, the former chair of Cheyenne LEADS said, “most of these businesses would have located elsewhere.”

And those construction projects help support other parts of the state’s economy. Rex Lewis, the president of Cheyenne-based Puma Steel, has worked on numerous data center projects in Cheyenne and in surrounding states. Whether building data centers or hospitals, the company needs every job it can get. Data centers, he said, pay well, especially when those projects can help encourage other businesses to relocate to the area.

“I would say it’s a gateway issue,” he said. “I hate to speak in absolutes, but, if we don’t have this sales tax credit for data centers … there hasn’t been a data center built in a state that doesn’t have these incentives.”

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Politics Reporter

Nick Reynolds covers state politics and policy. A native of Central New York, he has spent his career covering governments big and small, and several Congressional campaigns. He graduated from the State University of New York at Brockport in 2015.

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