Voters are fired up over data centers. Do Nevada candidates care?

For more than an hour last week, lawmakers questioned the head of the Governor's Office of Economic Development (GOED) about the state's data center tax break program, which has given more than $457 million in estimated tax abatements since 2015.

He revealed that his office has met with people across Nevada to assess the tax break program — the first public indication that changes could be forthcoming. Gov. Joe Lombardo's office also said in a statement that it "is proactively engaged in discussions on the current abatement structure for data centers, given the evolving environment of the industry."

It all reflects how data centers are driving new political conversations in Nevada — especially on the campaign trail.

From the governor's race to a contest for a rural county commission seat, data centers have emerged as a central issue in elections up and down — and even on — Nevada ballots this year amid growing public opposition.

It hasn't reached the level of campaign mailers and advertisements, but faced with questions from voters, candidates are wrestling with whether the companies' tax revenues and construction jobs provide enough of a boost to offset concerns about water, energy and land uses. 

Although data centers create a significant number of temporary construction jobs, they do not provide many long-term jobs. The more than $450 million in state tax breaks have come alongside the promise of about 400 permanent jobs.

Local governments have missed out on more than $537 million in sales and use tax revenues because of the incentives, a Nevada Independent analysis found. But supporters of the tax breaks have said companies would not choose Nevada without them, giving the state no revenue from the industry.

Read More: Have data center tax breaks helped Nevada's economy? Here's what we found.

In Nevada, the most significant action happened last week when the Reno City Council hit pause on approving data centers. But there are disagreements about what happens next and whether it will lead to actual changes.

And earlier this week, commissioners in Humboldt County — a region in Northern Nevada that borders Oregon — also placed a pause on data center approvals as they research ways to regulate them.

UNLV political science professor David Damore said in an interview that data centers have likely taken off as a political issue because of how many areas it touches: the environment, AI, economic development and more.

"All of that sort of creates the sort of perfect storm that people are seeing," he said. "Climate change obviously taps into a lot of these same issues, but that's sort of seen as 'This is happening way in the future, I can't do anything about it.' This is something I think people think that, 'Oh, this is policy that can be changed.'"

The governor's mansion

Because the governor is the ultimate authority on approving statewide legislation, they have the most power in the state when it comes to data centers. 

Unlike many other issues, Attorney General Aaron Ford (D) and Lombardo appear to largely be aligned.

"It is business development, it's jobs, and it's the expansion of the economy," Lombardo said in response to a question at a recent event. "They're a good solution to our economic problems. Not the absolute solution, but they're part of the solution."

Asked about his thoughts on the tax breaks, Lombardo's campaign referred to his office's statement about the ongoing review of the program. Lombardo's campaign also said he would not support any economic development project that increases energy and water costs for Nevadans. 

Ford, whose office sued NV Energy over a forthcoming charging process focused on a consumer's highest daily use of electricity, said in a statement that any data center that wants to operate in Nevada must pay for its energy use and electrical grid updates, and that they need to "find alternative water sources or cooling systems to protect our fresh water supply."

As a state senator, Ford was part of a unanimous vote in support of the data center tax break program in 2015. Ford's campaign said he would order GOED to assess abatement programs and how data centers are affecting utility costs. He would seek changes based on those findings to ensure Nevadans benefit from data centers.

Ford's website also says he will "support the jobs that data centers bring to our state." 

Ford's top competitor in the governor's race, Washoe County Commissioner Alexis Hill, has been much more vocal — vowing to pause data center tax breaks and do more research into their environmental effects.

"Data centers don't need the subsidy," Hill said in an interview. "Let's subsidize some things that make more sense for us."

Environmental advocates have also long said a key impediment to data center regulations in Nevada is the fact that there are no standard processes across the state. Hill said she wants to create a statewide permitting process for these buildings, in addition to requiring companies to follow the strictest renewable energy standards.

"I'm not saying, 'no more data centers for the history of Nevada,'" she said. "I'm saying, 'proper regulation.'"

Should the biggest little city have data centers?

The Reno City Council's recent pause on data center approvals has become a major issue in the city's open mayoral race.

It's especially pertinent for mayoral candidate Councilmember Devon Reese, who proposed the pause. He has suggested adding a checklist to the permitting process that would include water and power impact studies. He also wants to require community benefits agreements and tie incentives to performance.

His push for a pause came as a surprise to advocates because he previously was against a moratorium and the timing drew skepticism from many people given its proximity to the primary election — accusations he has forcefully denied.

"I would say the timing is very, very peculiar right now," Councilmember Kathleen Taylor, another mayoral candidate, said at an April city meeting.

Taylor was the only vote against the moratorium. In an interview with The Indy last month, she said "we've got to preserve the resources and quality of life" of people in Reno, but she also is against outright stopping data center approval.

She added that because there has not been a surge in new data centers coming into Nevada — none since last year and three in the past two years — there is no point in shutting off data center approvals. Instead, at a city council meeting last week, she wanted to fast-track the city's current work to change code for data centers, but the council was not allowed to vote on that.

"Why would we say, 'We don't even want to entertain having a conversation with you,'" she said.

Kate Marshall, the state's former lieutenant governor and treasurer who is also running for mayor, supports a moratorium. She thinks "data centers do not belong" within Reno city limits, but she also acknowledged that is not a "complete answer" because the companies could still go to other areas and deplete resources.

She thinks there is value in working with other local governments, but that should not be the end-all, be-all.

"It's important for the city to not cede that responsibility under the guise of, 'Well, I don't want to be different than anyone else,'" she said.

She also said the city has not done enough to extract benefits from data center companies.

"We are not asking the question of what the data centers can do for us," she said. "There's no exchange."

Small-town races

Officials in Lyon County, a rural area southeast of Reno, have taken initial steps to pave the way for a 14-building data center campus — and it has come up in a race for an open county commission seat.

"We need taxable earnings to support our infrastructure," said Micah Triplett, one of four candidates running for Lyon County Commission District 5, at a recent candidate forum.

In an email, Triplett said he is not a "a blanket 'pro-data center' advocate," but someone who wants to promote growth in the county and support the county's "agricultural heritage." 

In Southern Nevada, the question of permitting data centers will literally be on the ballot — Boulder City residents are being asked to weigh in on whether data centers can be built on a portion of city-owned land. Before the city approves a development on that land, it must get approval from voters, some of whom opposed the ballot question amid concerns about the developments' effects on water.

However, Mayor Joe Hardy, who is running for re-election, said there is a need for more money to come into city coffers.

"Why am I willing to consider as a candidate that I want a data center?" he said in an interview. "It's because I will get more money. And if I can get more money, then I can provide more services to the city of Boulder City."