Nevada governor candidate Aaron Ford pledges to pause new data center tax breaks

Aaron Ford, the Democratic nominee for Nevada governor, has pledged to pause new data center tax breaks if elected, calling for a systematic review of the economic effects of the existing program.

The plan is part of a new data center policy platform that Ford's campaign released Wednesday and shared exclusively with The Nevada Independent. It also calls for a statewide ban on evaporative cooling and tracking more metrics on data centers receiving tax breaks.

Ford had previously pledged to ensure that data centers do not increase Nevadans' energy costs, but the new platform represents a dramatic escalation. There are 76 data center buildings planned or constructed in the Silver State, according to online tracker Data Center Map.

Gov. Joe Lombardo (R) has supported data center developments but has vowed to ensure they do not increase utility costs for Nevadans. His administration is also reviewing the tax break program but has not said if it is considering changes.

Ford and Lombardo's stances on data centers were, up to this point, largely similar. But the Democrat's new proposal creates a significant divergence, something Ford has said is evidence of his willingness — and Lombardo's unwillingness — to stand up to large corporations. A PAC tied to Lombardo's campaign received $1 million this year from the wife of the founder of Switch, a data center company with a significant footprint in Nevada.

"I'll use everything within my power to stop awarding tax breaks for data centers until they prove that they are holding their end of the bargain," Ford said in an interview.

Nevada has provided tax breaks to 14 data centers that total an estimated $461 million, alongside the promise of 313 permanent jobs. A 2015 bill — which Ford supported as a senator — created the program, which provides generous property and sales tax relief. 

However, pausing the tax breaks while the state audits every company with an incentive won't necessarily be easy and could require the Legislature to pass new laws.

The governor does not have unilateral authority to reject a data center abatement application. Instead, that power rests with the board of the Governor's Office of Economic Development (GOED), which is composed of the governor, other statewide officials and businesspeople.

Asked how he would ensure data center tax breaks are not approved, Ford said, "I will use the bully pulpit of the governor's office to ensure that my intention is known — that we will not be giving new abatements to companies while we audit" those that received the tax breaks.

Tax break approvals have been paused before, with the board and governor agreeing in 2019 to pump the brakes as GOED searched for a new director.

To receive a data center tax abatement, a company must meet requirements in capital expenditures, jobs, hourly wages and more, as well as agree to regular audits. 

However, The Nevada Independent reported earlier this year that little information is available to the public about whether the companies' outputs were worth the incentives. The public has also limited access to full company audits, which some experts said was an apparent violation of state law.

Ford's proposal aims to address that by requiring GOED to publicly post audits on whether abated companies lived up to their economic output and tax revenues promises.

This information is not audited already because it is not a requirement for a company to keep receiving the incentive. That means companies may not have to provide some of the information on economic output if asked.

"We're going to follow the law as it allows us to audit," Ford said. "But if I need additional authorization from the Legislature to expand the audits, so be it."

Ford's policy also stops short of seeking to stop data center abatements permanently, which he said was "the responsible approach."

Other new proposals

The attorney general pledged to oppose the development of data centers on federal land — an issue that has exploded near Las Vegas recently — saying the priority for this development should be affordable housing. He also wants to help local governments in crafting community benefit agreements with developers.

Ford also said he'd insist that data centers adhere to prevailing wage standards, create "sustainable jobs with top-notch health care and abide by stringent safety standards." Ford will also encourage companies to negotiate project-labor agreements with the unions working on the developments.

He told The Indy that it's part of his plan to ensure that "data centers do more than just take from our community," and that he is open to changing Nevada law if that is the best way to approach it.

He also pledged to hold public hearings about the potential buildout of each data center. He said he has heard from Nevadans that they don't think they have enough of an opportunity to speak out against the developments.

"I have heard from people in every corner of the state who have opinions on data centers," he said. "They do not feel as though Joe Lombardo was paying attention to these things."