Editors' Note: This is one of two stories The Indy is publishing about economic impacts and lack of transparency around Nevada's data center tax abatement program. Read the other here.

Emerging from the Great Recession, Nevada leaders were desperate to not just rebuild, but remake the hard-hit Silver State economy — and data centers were a beacon of hope.

Large buildings housing cloud computing servers were popping up throughout the West, and Nevada wanted a piece of the action. So in 2015, lawmakers approved a bill to dramatically cut down sales and personal property tax burdens for data centers.

"The bill that we have today, we think, is a very important step in making sure that Nevada is one of those locations where the cloud is housed," Steve Hill, then the director of the Governor's Office of Economic Development (GOED), said in a legislative hearing. "The jobs and industry that will revolve around where those data center hubs reside will be in this state."

But more than a decade later, as data centers have taken on a new role of fueling the artificial intelligence boom, there are significant disagreements about whether the industry's economic benefits are worth the combined $457 million in projected tax abatements that Nevada has doled out over the past decade.

Supporters say large abated companies, such as Google and Switch, have fueled a union employment renaissance in Northern Nevada that shows no signs of relenting. They have also said property taxes generated from large-acreage developments have provided a windfall to local governments in need.

"Despite the tax abatements … they do bring in revenue for the county and for the state of Nevada," said Austin Osborne, the county manager for Storey County, the small county east of Reno that hosts more than half of the data centers receiving abatements, including the ones built by Google and Switch.

Opponents emphasize the reality that data centers themselves, which are facilities that store massive amounts of data servers and equipment, do not employ many people — the state's incentive program requires either 10 or 50 employees, and the $457 million in approved incentives came alongside the promise of only about 300 jobs. They also say the purported economic benefits are not worth the significant energy and water usage the industry typically requires.

"You're getting … a big electricity user, a big water user that offers 10 jobs," said Michael Hicks, a professor at Ball State University whose research has scrutinized the economic effects of data center abatements.

Read more: Nevada likely to fall short of clean energy goals because of data centers

The picture is clouded by the fact the state does not track tax revenue or total economic activity tied to these companies, instead relying on projections made when it approved the tax relief — which would amount to about $1 billion in new tax revenues and more than $6.6 billion in economic activity. The state does monitor jobs created, though the information available is very limited, with job totals only published for one abated company.

Tracking how much tax money has been lost as a result of the incentives is clearer. Across the past eight years, local governments missed out on more than $537 million in sales and use tax revenues because of the incentives, according to a Nevada Independent analysis, though there is disagreement over what the revenue would look like if incentives were not in place. 

A 2023 analysis found Nevada data centers — including those that didn't receive abatements — employed 4,550 people and generated $290 million in state and local tax revenues.

Nevada officials have approved 15 abatements, but companies withdrew two of them.

Nevada is one of 38 states with a data center tax incentive program, but the tides may slowly be turning. Bills have advanced in three states this year — Georgia, Washington and Connecticut — to curtail future data center incentive programs.

In Virginia, home to the nation's highest concentration of data centers, disputes over a data center tax break program ground the state's budget process to a halt.

"States are not looking to completely undo the incentive, but they are seeking an off-ramp," said Nicholas Miller, a fiscal policy associate at the National Conference of State Legislatures. 

What information we know

The only statewide data about the companies' economic outputs come from reports that GOED — the state agency that approves the incentive agreements — releases every two years.

These reports contain some information from audits into the data center companies: jobs created, wages and capital expenditures. It does not include all audit information, such as the share of construction workers who are Nevada residents, and The Indy's attempts to gain access to audit reports went nowhere, in what some public record experts said was a violation of state law.

Read More: Nevadans get few details into data centers receiving tax breaks — and it might be illegal

But information in the reports is limited. Of the 13 data centers with active tax abatements, only three have had audits completed as of the January 2025 report.

Other information is from the controller's office, which must provide annual reports about how much local government sales and use tax revenue has decreased on a gross basis because of abatements. The data center abatements lower the companies' sales and use taxes on capital equipment to the 2 percent that the state receives.

This does not mean that local governments are losing money, but rather it shows how much more money could have been collected if the abatements were not in effect and the companies still had active operations.

"When we're talking about the cost to a state in particular, that is sales tax revenue that they would be collecting if not for the incentive," Miller said. "But because they abate the sales tax or the property tax, they're collecting less or in some cases no revenue versus what they would be otherwise."

Union leaders in Northern Nevada, which has seen some of the biggest data center projects in the state, say business has never been better because of the work involved in building data centers.

Jacob Haas, the business manager at the International Brotherhood of Electrical Workers Local 401, said in an interview that the union has 4,000 electricians out in the field in Northern Nevada now from all over the country, and about 80 percent are working on data center projects. It's also on track for almost 7 million man hours worked this year, far higher than the previous record.

"The data centers is what's fueling our growth and our employment right now," Haas said.

Kalani Kanekoa, the secretary-treasurer for Plumbers and Pipefitters Union Local 350, said work on each data center building can take up to two years, and a single complex can have up to a dozen buildings.

"It's done everybody a tremendous wealth," Kanekoa said.

Asked about the tax incentive program, Haas said, "I don't think that these companies need the tax breaks, but I do think that they do help draw the companies here instead of them building someplace else."

However, Hicks, the Ball State professor, said the amount of construction workers coming in from outside of the state is an argument against the tax incentives. Abatement agreements require that at least half of abated data centers' construction workers come from Nevada, but it's unclear what the exact numbers are because the state will not release the audit reports.

"Why would the Nevada state or local government be incentivizing the construction of the data center … if those jobs are going to people who don't live in that region or the state?" he said. "There's nothing wrong with it — that's economic activity — but why would you abate that?"

There's also widespread acknowledgement that once a data center is built, they don't bring many jobs. A study by Hicks into Texas' incentive program for data centers found it could not be justified on the grounds of job creation.

"The argument shouldn't be that data centers employ a ton of people directly," said Jared Walczak, a senior fellow at the Tax Foundation, a Washington, D.C.-based nonprofit that analyzes tax policy, who said data centers do employ people indirectly through the "consistent churn with the construction."

For example, when looking at the projected abatement sizes and promised permanent jobs, the data center program amounts to about $1.5 million in incentives per job. By contrast, the state's $1.25 billion tax incentive deal for Tesla came with a pledge of 6,500 permanent jobs — coming out to roughly $190,000 per job.

Olivia Tanager, the director of the Sierra Club Toiyabe Chapter, said the state should consider providing tax incentives to projects that create more long-term jobs, such as building up public transportation infrastructure.

She said it's problematic "if we're abating away a substantial amount of taxes, if we're using a lot of our natural resources, if we're burning increased fossil fuels under the name of economic development, but it's only economic development for a handful of folks who are working full-time versus an industry that could create more sustainable long-term jobs."

What's the alternative?

Part of the difficulty in measuring the economic impact of the tax incentive program is imagining life without it.

Nevada has approved 15 data center abatements since the program went online in 2015 — including the two withdrawn projects — and an online tracker shows about 70 data center locations with operations online or incoming. Abated companies have cited the incentives as a reason for their activity in Nevada, but it's difficult to know how much of a role it plays.

Some states have studied this — with contradictory findings. For example, a 2022 study in Georgia found 90 percent of the state's data center construction was because of the incentives. However, the same analysis conducted three years later found the opposite: 70 percent of the activity would have still happened without the tax relief.

Skeptics point to the fact that although data centers generate significant property tax revenues, local governments could still recoup those dollars from other companies that have no tax relief.

"There's an opportunity cost of giving that tax dollars up, and that is that land is not going to be used by somebody else," Hicks said.

Osborne, the Storey County manager, said in an interview that data centers bring benefits that other industries cannot. He cited Switch's investment into a UNR education center and the industry's high-paying, albeit limited, jobs.

"This would not be happening with the warehouse and distribution industry," he said. "Would you rather fill that space with warehouse and distribution, or high tech and highly skilled positions that are creating an economy here?"