After House State Affairs rejected a 50-year sales tax exemption for data centers earlier this month, Senate State Affairs this week approved a complicated plan for more unnecessary corporate welfare lasting 30 years for Big Tech.
Senator Casey Crabtree (R-8/Madison) pushed a hoghoused Senate Bill 239 through Senate State Affairs Wednesday to create different rules for tax breaks for data centers and other big projects:
Under the bill, the state Board of Economic Development would set a new minimum project cost every two years. A qualifying company’s agreement could last 30 years for equipment upgrades and four years for construction costs.
Companies would receive a “reinvestment payment” equal to or less than the state sales taxes paid by the project, as they do now, but state Governor’s Office of Economic Development Deputy Commissioner Joe Fiala told lawmakers that companies on this proposed “new track” would not have to pay sales taxes that qualify for a rebate.
“We’d do an analysis of the sales tax they would pay,” Fiala said. “We’d track that, and at the end of the project, we would have the ability to say, ‘You’ve done what you said. That sales tax you were going to pay, you do not have to pay it at the end of the project.’”
If companies don’t keep up their end of the bargain or show signs that they can’t meet the requirements while the agreement is still in place, the state could call in the owed sales taxes, Fiala said [Makenzie Huber, “Data Center Restrictions Earn Lawmaker Endorsement as Fight Continues over Tax Incentives,” South Dakota Searchlight, 2026.02.18].
As written, SB 239 would have run afoul of SB 135, a measure also approved Wednesday by Senate State Affairs, which would have banned tax exemptions of any sort to data centers. The Senate amended that ban out of SB 135 (as well as weakening language requiring data centers to pay full freight for their electricity) but left in place SB 135’s regulation of data centers’ water usage and protection of local governments’ authority to regulate or prohibit data centers. The Senate passed the amended SB 135 unanimously, leaving the door open for SB 239’s tax breaks.
On the bright side, SB 239 now includes a prohibition on giving tax breaks to cryptocurrency operations. SB 239 adds to the definition of “project cost” a line excluding “any amount paid as part of a new or expanded facility or equipment upgrades attributable to the processing, storage, retrieval, or communication of data related to cryptocurrency.” So while SB 239 still subsidizes the data centers that build the artificial intelligence that inherently destroys our civic institutions, SB 239 at least spares us the shame of subsidizing the fake money that supports human trafficking, Hamas, and other scourges.