Comal County commissioners are asking state legislators to review or repeal the State Sales Tax Exemption for Qualified Data Centers.
The commissioners are asking the Texas Legislature to designate an independent assessment on regional water availability and drought contingency planning for counties with Priority Groundwater Management Areas, or PGMAs, to appropriate legislative committees.
PGMAs are areas in Texas experiencing or expected to experience critical groundwater problems, according to the Texas Commission on Environmental Quality.
This would allow the committees to evaluate water consumption and help enact statewide legislation to address the impacts of large-scale data center developments, especially in water constrained areas, such as counties with PGMAs, according to a May 14 resolution approved by the court in a 4-1 vote. Precinct 2 Commissioner Scott Haag was the single dissenting vote.
Commissioners are also asking state officials and relevant regulatory agencies to require full, transparent public reporting of expected water usage for all proposed data center developments before final approval. The court also supports data centers using closed-loop cooling systems or other low volume potable water consumption technologies in data center facilities in regions with high water availability, according to the resolution text.
Explained
A qualifying data center is a facility of at least 100,000 square feet consisting of a single building or portion of a building that has been or will be constructed or refurbished to house servers and equipment for processing, storing or distributing data, according to the Texas comptroller.
Items essential to the operation of a qualified data center are temporarily exempt from the state’s 6.25% sales and use tax, according to the Texas comptroller.
Items eligible for exemptions are:
- An electrical system
- A cooling system
- An emergency generator, hardware or distributed mainframe computer or survey
- A data storage device
- Network connectivity equipment
The sales tax exemption for a qualified data center lasts for 10 or 15 years beginning from the date the comptroller’s office certifies the data center. The sales tax exemption is temporary.
There are four data centers in San Antonio and two data centers in Austin that are registered Qualifying Data Centers and Qualifying Large Data Center Projects in Texas, according to the Texas comptroller.
What Comal County commissioners are saying
Precinct 3 Commissioner Kevin Webb said there are things that the state controls that counties don’t. He also said he does not care for the sales tax break the state is giving data center developments.
“What this [resolution] does is it asks the state to take a look at these things and give some direction, especially in areas where folks have PGMAs like we have in the county here,” Webb said.
Precinct 4 Commissioner Jen Crownover said the resolution will show state legislators that data centers are an important matter to the community.
“Right now, it seems like there’s a lot of incentivizing for these things but then there’s not a lot of accountability that we can hold at the local level,” Crownover said.
Haag said he thinks the state is already well aware of what the data centers are doing and what some of the problems are.
“We already know that the state is 100% behind these data centers. Are we just [going to] go butt heads with the state? How do you think that’s [going to] work for us? I don’t think this resolution is [going to] do anything for us,” Haag said.
Haag also said the state can “do what they want” with the tax money coming in from data centers.
“I look at it this way,” Haag said. “Would you rather have a 500-acre development with 10 buildings on it with 10 people or 20 people in each building, or do you want a 500-acre piece of property with however many houses they can cram in there. What’s the difference?”
Comal County Judge Kristen Hoyt said she is hopeful that the court can come together to present legislative priorities for the next session to Sen. Donna Campbell and state Rep. Carrie Isaac.
