ATLANTA – Legislation temporarily suspending a state sales tax exemption aimed at attracting data centers to set up operations in Georgia has barely made it through the General Assembly.

The state Senate gave the bill final passage Thursday 29-22, the minimum number of votes needed to pass legislation in the 56-member chamber. The measure cleared the Georgia House of Representatives two weeks ago 96-71.

After the legislature enacted the tax break in 2018, companies flocked to Georgia to build data centers. Such big names as Microsoft, Meta, and Google took part in the surge of construction.

But the industry has become a victim of its own success. The new data centers are sucking up so much electricity that Georgia Power executives testified before the state Public Service Commission recently that the industry accounts for 80% of the additional electrical generating capacity the utility is seeking from the PSC.

“These have taken about the equivalent of one of our [Plant] Vogtle units,” said Senate Finance Committee Chairman Chuck Hufstetler, R-Rome, referring to the nuclear expansion Georgia Power is expected to fully bring into service this spring.

During Thursday’s Senate floor debate, Hufstetler also cited a 2022 state audit that found the tax exemption for data centers was only returning 24 cents on the dollar.

“These do not create jobs,” said Sen. John Albers, R-Roswell. “They create big buildings, but they do not create jobs.”

The industry begs to differ. According to a fact sheet issued by the Data Center Coalition, an organization of companies that build data centers, the construction and operation of data centers in Georgia are had a direct economic impact of $1.4 billion in fiscal 2021, including 1,020 construction jobs and 3,480 operations jobs.

“Ninety percent of the investment in Georgia since 2018 wouldn’t have happened but for the incentive,” said Dan Diorio, the coalition’s director of public policy.

Data Centers also are paying economic dividends beyond the industry itself, Diorio said. The centers were responsible for $3.9 billion in indirect economic impact between July 2020 and June 2021 including 18,440 jobs, according to a report from Virginia-based Mangum Economics.

“They create business ecosystems around them,” Diorio said.

The bill would suspend the sales tax break for data centers for two years while a 14-member state commission the legislation creates would examine the impact data centers are having on Georgia’s electric grid.

Opponents say even a two-year hiatus would send the wrong message to companies that might be interested in coming to Georgia.

“When you go out and recruit somebody to come to this state and promise them incentives … this bill seeks to pull out the rug from underneath these folks,” Sen. Derek Mallow, D-Savannah, said Thursday on the Senate floor. “That’s not the way to do business.”

Albers took exception to that argument. He said the suspension of the tax exemption would not apply to companies that submit applications to the state Department of Revenue before the bill takes effect July 1.

“To say the rug would be pulled out of any business is a misrepresentation,” he said.

The bill’s opponents also argued that suspending the tax exemption isn’t necessary. Diorio pointed to Georgia Power’s recent testimony before the PSC that the utility will have enough power to meet its customers’ needs if the commission approves its request for additional generating capacity.

“They feel they have the opportunity to add that and hold ratepayers harmless,” he said.

“We have plenty of power for what’s coming down the pike,” added Sen. Frank Ginn, R-Danielsville, who once worked in the electric industry and was one of only two Senate Republicans to vote against the bill.

But environmental advocates countered that the stress power-hungry data centers put on the state’s electric grid fails to justify a tax incentive that is not delivering a return to taxpayers.

“The data center tax break has been a disastrous policy, exacerbating environmental degradation without significant economic benefits,” said Andrea Jones, government relations public policy director for Georgia WAND.

“By pausing the tax breaks and conducting a comprehensive study of energy and water usage, we can work toward a greener, more sustainable future for Georgia.”

The bill now goes to Gov. Brian Kemp’s desk for his signature. The coalition is urging the governor to veto the measure.

“Georgia is currently a national leader in attracting data center investment and deploying the digital infrastructure that powers America’s innovation economy,” said Josh Levi, the coalition’s president. “Abruptly suspending the state’s data center program would send the wrong message to all capital-intensive businesses for which certainty and predictability are essential.”