In a survey released this morning by Scioto Analysis, 10 of 14 economists agreed that tax incentives for data centers are not an efficient use of public funds to stimulate job growth in Ohio.
Petitioners in Ohio have started collecting signatures to get a proposed constitutional amendment to ban data centers on the November ballot. Ohio already has about 200 data centers, the fifth largest in the country. Proponents of data centers argue that they create jobs and stimulate the economy, while opponents argue they increase energy prices and use up otherwise valuable farmland.
Most respondents disagreed that tax incentives for data centers are an efficient use of funds, with 3 economists uncertain and 1 economist agreeing. Albert Summell of Youngstown State University explained “I can’t think of a worse use of public funds than to incentivize data centers. They are associated with very few permanent jobs and high external costs”. Other economists who were more uncertain expressed that whether or not tax incentives for data centers are an efficient use of funds depends on what economic activity occurs after construction commences.
8 of 14 economists disagreed that the economic benefits of new data centers in Ohio exceed the environmental and energy market externality costs associated with their construction. According to Charles Imboden of Bowling Green State University, “[Data centers] create very few jobs and destroy environmental conditions, for example by changing water temperatures [and] disrupting fish stocks”. Of the remaining economists, 2 agreed and 4 were uncertain. Among those who agreed, economists expressed that the environmental costs would be small, and the potential tax revenue could exceed such costs.
8 of 14 economists agreed that the economic costs of a statewide ban on new data centers in Ohio would outweigh the economic benefits. Michael Jones of the University of Cincinnati expressed, “It should be up to the market to pick winners and losers; and Ohio should not be targeting a particular industry. If there are concerns about energy use or land use, then data centers should internalize and pay the real costs of their deployment.” Of the remaining economists, 5 were uncertain and 2 disagreed. The economists who were uncertain recommended that data centers should be taxed according to their external costs or forced to cover the increased costs of electricity.
The Ohio Economic Experts Panel is a panel of over 30 Ohio Economists from over 30 Ohio higher educational institutions conducted by Scioto Analysis. The goal of the Ohio Economic Experts Panel is to promote better policy outcomes by providing policymakers, policy influencers, and the public with the informed opinions of Ohio’s leading economists. Individual responses to all surveys can be found here.
