Gov. Joe Lombardo's (R) administration revealed earlier this year it was holding discussions about the state's data center tax break program — the first public indication that changes could be on the table for the increasingly divisive incentives.

But in the four months since then, little has been publicly said.

The Nevada Independent reached out to officials across the state to better understand who has and hasn't been involved in these conversations and what they might mean for the future of the tax break program.

The Indy found that most state conversations were with groups focused on economic development in rural and urban areas, utility providers and industry representatives. However, none of the 12 counties reached by The Indy said the Governor's Office of Economic Development (GOED) engaged with them as part of the review, which caused some concerns considering the tax breaks are likely going to burden local government coffers.

"I don't think they've ever asked us," said Rex Steninger, an Elko County commissioner.

The Indy also reached out to officials in Las Vegas, North Las Vegas, Henderson, Reno, Sparks and Boulder City. A spokesperson North Las Vegas said a staff member was involved in an early April meeting, while the rest said they were not involved.

In May, GOED held a meeting that included local economic development officials and the Nevada Association of Counties. The association also held a data center forum over the summer, where GOED shared insights into the tax break program.

GOED said water and power infrastructure have been part of the discussions, but it declined to say what specific changes could be in the works. 

Since the 2015 bill creating the generous property and sales tax breaks, Nevada has issued incentives to 14 data centers that total an estimated $461 million, alongside the promise of 313 permanent jobs. 

There are 76 data centers built or planned in Nevada, according to the online tracker Data Center Map.

The state's data center tax break program has come under fire amid growing opposition to data centers, specifically over their potentially high water and energy uses. The Indy has reported that it remains unclear whether it has been a good deal for the state, with uncertainties over whether companies have lived up to their job creation promises.

Nevada Attorney General Aaron Ford (D), who is running for governor and was a sponsor of the 2015 bill that started the tax break program, recently released a data center policy platform that seeks to pause the program pending audits of every company currently receiving the tax break.

For his part, Lombardo has remained supportive of data centers, and he has hinted that his campaign is set to release its own policy platform. When The Indy asked his campaign earlier this year about his stance on the tax breaks, he referred to GOED's review of the program. 

County governments

Several counties — which, along with city governments, have ultimate decision making authority on whether a data center can be built in their limits — have paused or outright banned data center construction.

But so far, they have been left out of any discussions on the tax break program.

In response to The Indy's questions, officials from 12 of the state's 17 counties said they have not been involved in the review of the data center tax break program. The other largely rural counties — Eureka, Lincoln, Lyon, Mineral and Washoe counties — did not respond.

Counties have at times played a role in changing tax break rules. Last year, Storey County, a rural county east of Reno that is a hub for data centers, successfully required companies such as Tesla to offset some public costs as a requirement of an abatement. In the 2019 legislative session, counties supported a bill that ensured that certain tax break packages will not decrease tax revenues that go to local schools.

At the same time, although counties have oversight of areas such as zoning and permitting, they historically have had no say in whether a company within their jurisdiction receives tax relief — something that officials have said shouldn't be the norm.

Some county officials told The Indy their perspective is particularly important considering the impact the tax breaks have on their budgets. The program gives data centers a 75 percent abatement of the tax on personal property, such as business equipment, and a sales and use tax rate of 2 percent.

Over the last eight fiscal years, local governments missed out on more than $537 million in sales and use tax revenues because of the incentives, according to an Indy analysis.

"Where's the revenue if the taxes are abated?" Steninger from Elko County said. "We'd have to come up with some other method of compensating the county."

These revenue losses have only affected local governments in three counties, Clark, Washoe and Storey, because they are the only three areas where a data center has received a tax break.

Still, there are disagreements over the economic impact of axing the tax breaks, in part because it's difficult to know how many data centers would still come to Nevada without the tax relief. 

A 2023 analysis commissioned by a national data center trade group 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.

Amy Hyne-Sutherland, the CEO of the Nevada Association of Counties, commended GOED for conducting outreach to her group but added that counties should be included because they each have unique needs.

"[C]ounties need to be at the table for these discussions early and often so we can all cooperatively serve our communities," she said in an email.

Economic development groups

Central to the state's outreach has been regional development agencies, which are non-governmental groups focused on their area's economic futures. These groups have historically acted as liaison between the state and companies seeking an abatement.

The two largest entities — which cover the Las Vegas and Reno areas —  have been part of discussions with the state, but both declined an interview.

In a statement, the Las Vegas Global Economic Alliance said it has participated in the discussions "to both share insights and learn from the input of others regarding data center development in Nevada."

"Our role is not to advocate for or against any particular type of project, but to understand the facts, weigh the tradeoffs, and help ensure that any investment contributes positively to Southern Nevada's long-term economic strategy," the statement said.

Additionally, Northern NV Now said its position on data center tax breaks "has been consistent."

"Nevada competes best when we pair investment and growth with the infrastructure to support it and real stewardship of the power, water, and natural resources that make this such a good place to live and do business," President and CEO Taylor Adams said in a statement. "Those are exactly the questions worth working through carefully, and because they cross jurisdictional lines, they're best worked through together."

But not everyone took the same approach.

Sheldon Mudd, who leads the regional development agency for northeastern Nevada, said he has told state officials that "it is time to dissolve the data center abatement," in part because his region is already seeing an influx of interest from smaller scale developers.

"Which tells me they're getting booted from other locations, and so they're just looking for any community that's receptive to a project like theirs," he said. "The incentive for data centers is any community who's willing to have them."