Ohio Pauses AI Data Center Tax Incentive Amid State-Level Backlash

On May 15 2024, Governor Mike DeWine ordered a pause on new applications for Ohio’s AI data-center sales-tax exemption. The program cost $555 million in fiscal 2024 and $1.6 billion in 2025, far above the $136 million projected.

Associated Press

Since ChatGPT’s 2022 debut, hyperscale AI workloads have driven a nationwide data-center boom. Thirty-eight states now offer sales-tax breaks originally meant for a modest sector. Ohio’s exemption covers construction materials and high-cost equipment like server racks and cooling systems.

Associated Press

• Fiscal impact: $555 M (2024) and $1.6 B (2025) versus $136 M projected; $27.2 B capital attracted in 2025, $9.6 B in 2024.

Associated Press

• Energy: IEA says a typical AI data center uses power equal to 100,000 homes; LBNL projects AI centers could reach 12 % of U.S. electricity by 2028.

Pensacola News Journal

• Water: Mid-size facilities ~300,000 gallons / day; largest >5 million gallons / day.

How Water and Wastewater Capacity Now Decide AI Data Center Sites

DeWine’s office said the pause “lets citizens and businesses know the incentive is under review.” Gov. Phil Scott vetoed a Vermont AI-data-center bill, citing Act 250 as sufficient oversight. The Ohio Chamber of Commerce warned suspension could push investment to other states.

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Labor leader Dorsey Hager (Columbus/Central Ohio Building and Construction Trades Council) called the pause “upsetting” for developers. Environmental groups in Kentucky and Florida cite water-intensive cooling as a local threat. Dowagiac, Michigan residents filed a class-action alleging persistent noise from a nearby AI data center.

Associated Press

Ohio’s fiscal office projected a $136 million FY 2025 loss, while the Department of Taxation reported $1.6 billion actual costs. Water-use estimates for large AI campuses range from 2 million to over 5 million gallons per day, reflecting differing cooling assumptions.

How Water and Wastewater Capacity Now Decide AI Data Center Sites

• “The governor felt it was the right time to let the citizens know, let businesses know that we’re going to pause on new offers of this tax incentive while that process plays out,” — Dan Tierney, spokesperson for Gov. Mike DeWine

Associated Press

• “We cannot afford policies that risk driving current or future jobs and investment to other states, when we already have regulations and policies in place to address our concerns about data centers,” — Gov. Phil Scott

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• “Nearby homeowners say the sound can be heard outdoors and inside their homes.” — Dowagiac residents, lawsuit filing

Michigan Residents Sue AI Data Center Operator Over Alleged Noise Pollution in Class Action

Ohio’s Select Committee will hold its first public hearing by June 1, and a citizen-initiated referendum must collect 400,000 signatures by July 1 for the November ballot. Vermont’s legislature is reviewing zoning measures, while Virginia and Denmark reassess grid-capacity rules for large AI loads.

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