Georgia lawmakers vowed to restrain tax breaks. But the governor’s veto saved a data-center break

ATLANTA — Georgia lawmakers vowed they were going to rein in tax breaks for businesses this year.

Their efforts came to nothing.

Gov. Brian Kemp on Tuesday vetoed a two-year pause in a sales tax exemption the state gives for building and equipping computer data centers, after an intensive lobbying effort to preserve the tax break.

Kemp’s veto shows how hard it is to root out established tax breaks, said lawmakers and national experts.

“Any time you create a carve-out in your tax code, you then create a self-interested lobby around it,” said Greg LeRoy, the executive director of Good Jobs First, a liberal-leaning group long skeptical of economic development incentives.

The Republican governor wrote that he was vetoing House Bill 1192 because businesses had already made plans for data centers using the exemption and that the “abrupt” July 1 freeze would undermine “the investments made by high-technology data center operators, customers, and other stakeholders in reliance on the recent extension, and inhibiting important infrastructure and job development.”

The dispute in Georgia mirrors fights in other states including Virginia, where the rising number of data centers is sparking a backlash, and in Arkansas, where lawmakers are moving to impose new restrictions on data centers that mine cryptocurrency.

In Georgia, some people are pushing the city of Atlanta to ban data centers near transit stations and the Beltline walking trail, as well as to stop offering local property tax abatements atop the state sales tax break. Although local jurisdictions benefit from property taxes on investments that can run into the hundreds of millions of dollars, data centers typically support few jobs.

Freezing the data-center tax exemption was the only bill that advanced following a a monthslong review of all the tax breaks that Georgia offers to various industries Lawmakers earlier gutted and then discarded an effort to cap the $1.35 billion Georgia spends on income tax credits subsidizing movie and television production.

So many data centers are opening or expanding in the state that it is causing a notable drain on the power grid, leading Georgia Power Co. to say it quickly needs to build or contract for new electrical generation capacity. The International Energy Agency says electrical consumption from data centers worldwide could double by 2026, calling for a focus on efficiency.

Georgia Power says new users will more than pay for the additional generating…