Lawmakers join labor, business interests in call for data center tax incentives

Lawmakers join labor, business interests in call for data center tax incentives

Illinois losing out to 30 other states which already offer incentives, study says


Capitol News Illinois

SPRINGFIELD – A group of upstate and downstate Republicans and Democrats joined labor and business interests Wednesday to call on the General Assembly to pass a bill that creates tax incentives aimed at bringing data centers to the state.

Data centers are large facilities containing computers that process and distribute large amounts of information for a wide range of industries, storing images, emails, word documents and more. They generated approximately $321.7 million in state and local revenue in Illinois in 2017, according to a news release.

The news release said Illinois saw 31,500 high-paying jobs within the industry, as well as $54.1 million in construction labor income for 820 workers.

But advocates for the incentives said Illinois is losing out on greater economic activity to the 30 states that currently offer incentives.

The group pointed to a study published by Mangum Economics for the Illinois and Chicagoland Chamber Foundations that said Chicago’s data center market grew 7 percent from June 2017 to June 2018. In contrast, states and cities with incentives experienced much higher growth rates, including Phoenix (26 percent), Northern Virginia (16 percent) and Atlanta (12 percent).

The study said that if a large data center similar to an Apple facility recently built in Iowa was placed in Illinois, it could generate 3,360 jobs, $203.9 million in labor income and $521.7 million in economic output. That would generate approximately $20.2 million in state and local tax revenue.

The Illinois Senate passed a data center incentive bill in April, but the language of that bill, Senate Bill 1591, has been replaced in the House, which has yet to pass a similar proposal.

The incentives would have applied to new and existing data centers that invested more than $250 million in construction and electronic hardware infrastructure costs. The bill included an abatement of sales taxes for construction materials and data center hardware which has to be cycled out every 2 to 4 years. The bill also contained protections for taxpayers that would allow the state to recoup funds from companies that do not meet certain requirements.

Tyler Diers, director of legislative affairs for the Illinois Chamber of Commerce, said smaller data centers could be placed in Chicago, while larger facilities could find a home downstate.

“Urban and rural, this is a great opportunity for the state,” Diers said. 

Michael Reever senior vice president of the Chicagoland Chamber of Commerce, said tax incentives are not a “loss for Illinois” because they bring investments to the state that would otherwise never have happened.

“The investment is going to Iowa, Indiana and the other 28 states that have similar legislation,” he said.

Diers called incentives necessary for a “downstate renaissance” by “giving our rural communities a shot at the digital economy.”

The group urged the Legislature to include the incentives in a budget-related bill package by the end of the legislative session.



© Copyright 2019 Capitol News Illinois

Jerry Nowicki

Jerry NowickiJerry Nowicki

Jerry has more than five years of experience in and around state government and nearly 10 years of experience in news. He grew up in south suburban Evergreen Park and received a bachelor’s degree from Illinois State University and a master’s degree online from Purdue University.

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