CHARLESTON, W.Va. — State Treasurer Larry Pack released a report Tuesday that he hopes will help lawmakers, communities, and citizens better understand how data center tax revenues will flow.
Pack, who appeared Tuesday on MetroNews “Talkline,”, said he developed the report to help get the facts straight about what communities can expect.
In Pack’s report two projects are detailed—the Penzance Management Project in Berkeley County valued at $10 billion and the Google Project in Putnam County valued at $7 billion. The bottom line total income for the counties would exceed $100 million annually.
Using the Berkeley County project as an example, Pack said 60 percent of the value would fall under personal property tax rules and 40 percent under property tax rules. The taxable portion of the project would be governed by the High-Technology Business Property Valuation Act passed in 2009 and adjusted in 2014.
“That $6 billion is only going to be taxed at five percent of value,” Pack said. “So, instead of being a $10 billion assessed value, it’s going to be more like $2.5 billion; again, this was a bill that was passed many years ago.”
Pack said the major entities that would share data center tax revenue would be county commissions, boards of education, and the personal income tax reduction fund. Every jurisdiction is slightly different, but elected officials will have new revenue to address issues in their counties.
“In Berkeley County, the county commission would get about 17 percent, or about $10 million; the Board of Education would get about 45 percent, or about $28 million; and the state Personal Income Tax Reduction Fund would get $17 million, or 27 percent,” Pack said.
The Putnam County Google project would provide $8.5 million a year for the county commission and the board of education about $17.4 million a year.
Pack said the portion that would go to the personal income tax reduction fund is misunderstood by many across the state. He said the 50 percent rate is only in effect in those counties where there are no excess levies.
“Instead of 50 percent in Berkeley County going to the Personal Income Tax Reduction Fund, it’s more like 27 percent,” Pack said. “We hear that 50 percent a lot, and that’s why we put this report out because it’s much less than 50 percent, it’s more like 27 percent.”
Pack said the analysis proves what most suspected that data centers will be profitable but he said it’s a balancing act.
“You just got to remember there is some disruption to people’s lives. We’ve got to give them grace and understanding,” Pack said. “If they’ve bought their piece of paradise and all of the sudden you have a million square foot building next door that’s having an impact on them.”
Getting off cheap
Del. Shawn Fluharty, D-Ohio, said the legislature had an opportunity to change some of the tax structure when the Power Generation and Consumption Act was signed into law last year. He said there’s no way the data centers should be taxed at salvage rate of 5 percent.
“We didn’t properly negotiate, and that’s the reality of it,” Fluharty said. “I think that’s why the people of West Virginia are so angry—they know this build-out is coming, and they feel like yet again the legislature has failed them again.”
The debate on that bill largely centered around preventing electricity rates from rising and reducing the county share of tax income, not a review of the current tax structure.
Fluharty, who is seeking a state Senate seat in November, said West Virginia should put a pause on data center development, like neighboring states have, and reconsider the tax rate.
“The reality is, yes, we are going to have money coming in, that’s great, but is it the best bang for our buck? Absolutely not,” Fluharty said. “We’ve given away the bag yet again and we’ve done so on something we know is coming and the build out is coming and we didn’t properly negotiate it, that’s the reality of it.”
Fluharty said maybe there’s some way to tax the actual data produced by a data center.
“I presume the processing part of this is something we should look at in the legislature when it comes to a tax on that,” Fluharty said.
The analysis that Pack released Tuesday was done by former longtime state Deputy Revenue Secretary Mark Muchow.