Michigan Legislature OKs more tax breaks for data center

Posted at 8:55 PM, Feb 12, 2020
and last updated 2020-02-12 20:55:39-05

LANSING, Mich. (AP) — The Republican-led Michigan Senate on Tuesday approved additional tax breaks for a major Grand Rapids-area data center, sending the bill to Democratic Gov. Gretchen Whitmer for her expected signature.

Las Vegas-based Switch opened a mega-campus of computer servers in Kent County’s Gaines Township in 2017, after Michigan exempted it and “co-located” clients from sales, use and business-equipment taxes. Switch also was freed of many property taxes under a 2016 agreement.

The legislation cleared the Senate 25-12 after barely advancing from the GOP-controlled House amid a contentious debate in December , even after Switch and two school districts had worked out their differences.

Seventeen Republicans and eight Democrats supported the bill Tuesday. Seven Democrats and five Republicans opposed it. Whitmer’s office said she was reviewing the measure. She is expected to sign it, however.

The legislation would clarify that Switch is exempt from certain school taxes it was assessed for the first time more than a year ago. Switch has conceded that the deal as written clearly does not abate some taxes but has said the levies run counter to its “understanding” of the agreement with the state, Kent County and Gaines Township.

The nonpartisan House Fiscal Agency estimates that the bill would reduce school millages by $242,000 for the 2019 tax year, though much of it could be offset by raising the rate on other property owners.

The Legislature also gave final approval to bills that would require that the school aid fund be reimbursed for all revenue lost from tax exemptions for qualified data centers. When the breaks were enacted for the industry in 2015, it was estimated they could total $111 million over 20 years.