Berkeley County officials are asking state tax officials questions about the financial breakdown of a potential data center project.
“These questions bear directly on the fiscal health of the Berkeley County Commission, Berkeley County’s schools, the integrity of voter-approved bond levies, and the authority of locally elected officials to carry out their constitutional duties,” local officials wrote.
Berkeley County is one of several locations in West Virginia where developers could be building data centers, the big warehouses for computer servers. And so it’s likely that additional local officials will have similar questions.
Data centers are being built across the United States at a record-breaking pace, with construction investment tripling in the last three years to meet big time demand for artificial intelligence and cloud computing.
They are prolific in states like neighboring Virginia, but they are also controversial among residents because of their aesthetics and noise. They are not major employers but can contribute significantly to the tax base.
The “Power Generation and Consumption Act,” supported by Gov. Patrick Morrisey’s administration and signed into law last year, included a formula for how to divvy up the property tax base generated by data center development.
50% for a personal income tax reduction fund;
30% to the county or counties where the data center is located;
10% to go to all counties on a per capita basis;
5% to be used for an economic enhancement grant fund; and
5% for an electric credit stabilization and security fund.
Earlier this year, the governor announced plans for a big data center development on 548 acres in Falling Waters, Berkeley County.
The Berkeley County Commission, through legal director Anthony Delligatti, sent a 10-page letter to the state tax commissioner to ask questions about the financial split. MetroNews obtained the letter through a Freedom of Information Act request to the state.
County officials seek clarification on fourteen specific legal and fiscal questions. The letter expresses deep concerns that the law may unconstitutionally seize local funds, threaten school bonding capacity and trigger mandatory tax rollbacks for residents.
The county officials say effect on the school aid formula is the “most severe” financial risk. In state code, the “local share” of property taxes offsets state aid to schools.
Berkeley County worries that because the data center law lacks a carve-out for High Impact Data Center property, the county’s local share will be artificially inflated by property value from which it receives no actual revenue, potentially leading to a substantial reduction in state school aid.
“We have supported diversified development and have worked hard to bring investment to our county. We simply want to understand, in writing, how the State intends to administer a law that redirects tens of millions of dollars of local tax revenue away from local schools and local services,” the county officials wrote.
“The citizens of Berkeley County need these answers.”
The West Virginia Tax Division is working to answer the questions from the county. In the state’s reply to the MetroNews information request, the tax department defended the legislation as a bipartisan effort to benefit all citizens by funding water infrastructure and reducing state income taxes.
The state maintains that the new formula provides essential funding for services and schools across the entire region.
“That distribution was purposefully designed, through a bi-partisan effort in the 2025 Regular Session, to ensure that this type of economic development would benefit not only the counties where these projects were located but all West Virginians,” wrote Mark Morton, general counsel for the state tax department.
The state’s response continued, “That’s why House Bill 2014 dedicates half of the growth of general property tax revenue from these projects (potentially hundreds of mi lions of dollars each year) to reducing the state’s income tax.”
And, “It’s also why another ten percent of that revenue is allocated to water infrastructure and grid stabilization projects that can help all West Virginians, especially those who struggle daily with access to clean water and affordable electricity.”
“Under House Bill 2014, the county where microgrids and data centers are located keeps thirty percent of the in growth in general property tax revenue as well as one hundred percent of the base value, bond debt and excess levy revenue while the rest of the counties share in another ten percent of the new general revenue — meaning each of these projects, through the allocation formula House Bill 2014 enacts, will provide an additional, and much needed, source of funding for county services and schools throughout the state.”