LAS VEGAS (KTNV) — Nevada lawmakers are planning to introduce a bill during the next legislative session that could repeal tax breaks for data centers.
Work session documents from the Joint Interim Standing Committee on Revenue show Sen. Dina Neal, the JISC Chair, requested a bill be drafted to repeal portions of state law, that allow partial abatements of certain taxes imposed on new or expanded data centers, as well as a moratorium on the creation or expansion of any data centers in Nevada.
When looking at current state law, NRS 360.754, some of the stipulations to receive abatements include hiring certain numbers of Nevada residents to build and work at the data centers and investing capital assets into those projects.
According to Neal, there are 66 data centers in the state of Nevada and there are 22 that could come online.
Neal said her concerns come down to two main issues: financial needs and water.
"These are billionaire investments and there is no actual need for them to continue to have a partial abatement of taxes for a data center that they can afford to pay for themselves," Neal said. "Information was put into the record saying that certain data centers have adapted qualities where they are using less water. That is not all. Right? If you're familiar with the Growth and Infrastructure hearing when Assemblyman Howard Watts was the chair, there was information put out there around legacy data centers and how much water usage they are actually using. It was significant and substantial. Water is not something we can get back. It is not something that we can recreate."
Neal said others have voiced concerns about data center electricity usage and possible pollution.
"I have reviewed DRI [Desert Research Institute research], which was challenged by the data centers to say, 'Oh. You know. That wasn't necessarily good research.' I rebuffed that comment because I was just like if we're at the stage where we're now trying to say that a publicly-funded research institution in the State of Nevada is putting out bad research, I take issue with that," Neal said. "I was like so now we're doubting the scientists who actually earned a degree and have successfully been the research institute in the state."
Sen. Fabian Doñate said he was also concerned about security issues that data centers could create.
"The need for compute and the race for artificial intelligence is becoming more prevalent. However, I, at the same time, am very worried about foreign influence and the conversion and expansion of foreign-owned assets that utilize our natural resources. There have been cases here in Nevada that have used or have converted crypto mining facilities to now become data centers," Doñate said. "I think there are, obviously cases and companies including Switch and TensorWave that are leading the way in how we can really make this a better, efficient ecosystem. And so, my only comment is that for anyone that's watching, all I would ask is that within the next couple of months, for the industry partners to work alongside the legislators, both on this committee and beyond, because I think there could be a balance to protect consumers."
Assemblymembers Lisa Cole and Jason Patchett were the only two committee members who voted against the bill draft request. Cole said there are sufficient guardrails in place to protect Nevadans without resorting to a statewide moratorium.
"Nevada, to me, is positioned right now to win the lottery and one of the largest drivers of economic growth in the world. I'd instead support a well-crafted piece of legislation directing local jurisdictions to negotiate development agreements and continuing the existing subsidies as long as we hold them to the highest standards on water conservation and grid buildout so these costs never land on ratepayers," Cole said. "The governor's office has landed on that same side, having signed the ratepayer protection pledge. If a company wants to build here, it brings its own power and water solutions. The PUCN's Rule 9 already requires large loads to fund their own infrastructure and this technology keeps improving."
Cole also stated the Southern Nevada Water Authority and the Nevada State AFL-CIO have rules in place regarding data centers.
"When labor and the governor's office agree on the guard rails, that tells me we're closer to the right answer than a moratorium allows," Cole said. "Nevada already has strong statutory guard rails, wage floors, capital thresholds, resident hiring rules, and clawbacks. I'd rather modernize that framework than shut the door on an industry already supporting tens of thousands of Nevada jobs and creating real revenue streams for our local jurisdictions."
During the last public comment session, Storey County Commissioner Clay Mitchell said they are taking a "modernization approach to abatements" on a jurisdictional level.
According to Mitchell, 8,000 to 10,000 trade workers are working daily at the Tahoe-Reno Industrial Center. He said in addition to providing thousands of jobs, hundreds of apprenticeships have also been created, which are providing learning opportunities on these longer projects.
"It gives them stability and longevity. It allows them to really settle into the communities, which is pretty unique for the construction industry," Mitchell said. "The last thing that we would want to see is this prosperity grind to a halt."