State and local governments find themselves in a public finance dilemma as citizens rise up against data centers that can also function as tax cutting revenue generators.
"Several of the localities in Virginia that have received significant revenue have been able to lower residential property taxes," said Nicole Riley, the director of Virginia Government Affairs for the Data Center Coalition.
Loudoun County, Virginia, about 45 miles northwest of downtown Washington, D.C., is home to over 65 data centers.
Traditionally rural, Loudon began to transform in the early 2000's as tech firms tapped tax credits and laid fiber optic cable which turned the area into the data center capital of the world.
"Loudoun has cut its real property tax rate every year for ten straight years, from $1.145 per $100 of assessed value in 2016 to $0.805 in 2026," writes Kaitlyn Harger, a senior economist and research director at the Chamber of Progress.
"Counties do not usually cut rates that much or for that long without cutting services to match. Loudoun did not, and the data center tax base is why."
The Chamber of Progress is an industry trade group based in McLean, Virginia.
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According to their calculations, Loudoun has an overall service index of 115, with 100 representing the average.
Arlington comes in first with 131 but also collects a higher rate of property tax. The median tax on a home in Arlington is $9,245 while Loudoun is $5,988.
"Arlington funds the highest service level in the region, and it charges the median homeowner roughly 54% percent more than Loudoun does to fund it," said Harger.
"Loudoun reaches near the top of the service rankings for more than $3,000 less per household per year than Arlington asks."
The message of exploring the revenue possibilities offered by data centers is resonating with government officials on both sides of the Potomac River.
Multiple counters and municipalities in Maryland have already imposed bans and pauses on new data center construction.
Last week, at the Maryland Association of Counties summer conference, Ian Ullman, deputy director of the Maryland Energy Administration said, "Use the time that you have bought yourselves with your local moratorium, talk to other communities that have figured this out. Make your wish list. This is the time."
Democratic Gov. Wes Moore is being taken to task by Republican candidate Dan Cox who is calling for a statewide moratorium on hyperscale data centers.
The National Association of Counties is trying to keep up with the evolving debate by launching an online resource center to guide local officials through zoning complications dealing with setbacks, noise, architecture, power, and water usage.
"Data centers differ from traditional industrial developments in market pace, scale and economic structure. Recognizing these differences helps county leaders set realistic expectations and communicate clearly with departments, residents and private partners," said NACo.
