In a survey released this morning by Scioto Analysis, 23 of 37 economists agreed that local property tax abatements are an effective tool for attracting new data center development in Ohio.
As elections approach, data centers have emerged at the forefront of policy debates. Some lawmakers are pushing for more data centers, while others are skeptical due to community and environmental concerns. In the past, Ohio has offered tax incentives to attract data centers, but other policy options–such as requiring behind-the-meter electricity generation, which would mean that data centers would have to build their own on-site electricity generation plans, or banning data center construction–have gained traction.
23 of 37 economists agreed that local property tax abatements are an effective tool for attracting new data center development in Ohio. According to Curtis Reynolds of Kent State University, “I think that [local property tax abatements] are effective for attracting the data centers. That does not mean that I think they are a good idea.” Among other economists who agreed, many shared the sentiment that tax abatements are an effective tool for attracting new data centers while also indicating that they are not a good idea. Of the remaining economists, 9 disagreed and 5 were uncertain. Roman Sheremeta of Case Western Reserve University disagreed, stating that, “Data centers locate where the power is, not where the abatement is.”
Economists were mixed on whether requiring new data centers to generate their energy behind-the-meter would prevent energy bill increases for Ohio residents. 16 of 37 economists agreed, 11 were uncertain, and 10 economists disagreed. Casey Boyd-Swan of Kent State University agreed, indicating, “In practice, energy costs may not increase as much for Ohio residents, but most on-site generation will be natural gas turbines, which concentrate both air pollution and around-the-clock noise in the community where data centers are located.” However, Lucas Engelhardt from Kent State University disagreed, explaining, “This just pushes the demand back a step. Instead of competing for energy itself - driving energy prices up, they’ll be competing for the resources used to produce the energy - driving up the cost of those resources.”
20 of 37 economists disagreed that requiring new data centers to generate their energy behind-the-meter will reduce the environmental costs of data centers in Ohio. According to Jonathan Andreas of Bluffton University, “Most of the new power generation is burning fossil fuels and it is impossible to burn fossil fuels without any environmental costs. Furthermore, this is a way for AI companies to evade environmental regulations because the EPA’s acid-raid regulations explicitly does not apply to the behind-the-meter power generation.” Of the remaining economists, 13 were uncertain and 4 agreed. John Conzelmann of Denison University was uncertain, explaining, “This comes down to substitution patterns, which seem to lean toward natural gas. But it also depends on Ohio’s current grid’s environmental costs, of which I am unsure.”
The Ohio Economic Experts Panel is a panel of over 40 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.
