Bill now moves to the House of Representatives

The Michigan Senate has passed a bill to extend tax breaks for data centers in the state. Michigan Senator Kevin Hertel announced this week that the Michigan Senate has passed Senate Bill 237, a bill he introduced to “incentivize technology companies to locate in Michigan.” After passing by a vote of 142 to 24, the bill now moves to the Michigan House of Representatives. As previously reported, Senate Bills 237 and 238 and companion Bills 4905 and 4906 seek to […]

The Michigan Senate has passed a bill to extend tax breaks for data centers in the state.

Michigan Senator Kevin Hertel announced this week that the Michigan Senate has passed Senate Bill 237, a bill he introduced to “incentivize technology companies to locate in Michigan.”

After passing by a vote of 142 to 24, the bill now moves to the Michigan House of Representatives. As previously reported, Senate Bills 237 and 238 and companion Bills 4905 and 4906 seek to expand sales and use of tax exemptions for data centers in Michigan. Both House bills passed third reading and were referred to the full committee. The bills would extend the sales expiration date and use the tax exemption from 2035 to 2050 (or 2065 if the data center is located on brownfield land or a site primarily used as a power plant to generate electricity) and establish the same exemptions for corporate data centers.

To qualify for the exemption, the data center would have to make at least $250 million in capital investments, as well as create and sustain a minimum of 30 in-state jobs that pay at least 150 percent of the company’s median wage. “Data centers power everything from email to social media to search engines to online banking, and with growing investment in artificial intelligence, there is growing demand for more data generation, processing and storage,” said Senator Hertel. “Data centers are not only the backbone of our increasingly digital world, they are also economic engines that help drive long-term community growth. “These multi-billion dollar investments translate into increased state and local tax revenues that go to fund our schools and roads.”

Fiscal impact reports suggest the bills would reduce state and local revenues by an “unknown amount” that would likely be at least $52.5 million through fiscal year 2050-51 and at least $42.5 million through 2061.62 Hertel said his bill has the support of groups such as the Detroit Regional Chamber of Commerce, the Grands Rapids Chamber of Commerce, General Motors, Consumers Energy, DTE Energy, the Michigan Regional Council of Carpenters and Mechanics, the Michigan Labor District Council, the Michigan Construction Association, Michigan Economic Development Leaders and Net Choice.

Michigan does not have a large market for data centers. Switch is the state’s largest player; 365, Bedrock, and Sentinum are also present. An anonymous developer is planning a 280-acre campus in Benton Township. In 2022, then-Democratic Michigan Representative Yousef Rabhi attempted to introduce two bills that would eliminate sales and use tax exemptions for data centers. He had previously called data center tax exemption laws “corporate cronyism at its finest.”

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