US states can't account for datacenter tax breaks. Literally

The finding

It has been reported that a new Good Jobs First study accuses many US states and dozens of localities of flouting generally accepted accounting principles (GAAP) by failing to disclose revenue lost to datacenter tax abatements. The nonprofit says GASB Statement No. 77 — the rule that requires tax-abatement disclosures in audited Annual Comprehensive Financial Reports (ACFRs) since 2017 — is being ignored. Only three states, it has been reported, properly list these losses in ACFRs: Washington, Texas, and Virginia.

The scale

The numbers are jaw-dropping. It has been reported that Georgia is losing about $2.5 billion a year, Virginia $1.94 billion, and Texas roughly $1 billion, with scores of other jurisdictions hiding similar shortfalls in unregulated Tax Expenditure Reports (TERs) instead of audited statements. Why does that matter? ACFRs are audited and standardized; TERs are not. The practical effect: public budgets are running blind to huge, recurring giveaways to hyperscale server farms.

The context

Good Jobs First argues these abatements were written when datacenters were modest beasts — not the multi‑gigawatt, water‑thirsty, Manhattan‑sized complexes spawned by the current AI boom. It has been reported that major cloud and AI capex this year may hit roughly $635 billion, much of it for server farms. “No form of state spending is more out of control today than datacenter tax abatements,” said Good Jobs First executive director Greg LeRoy. The emotional sting is clear: communities complain about lost services and strained utilities while big tech expands with a wink and a tax break.

The ask and fallout

The report recommends states and localities come clean: conform to GAAP and retroactively disclose losses back to 2017. It has been reported that the disclosure gap is already fueling backlash — projects delayed or blocked, local fights heating up, even reports of violence at the margins. So what now? Policymakers can either lift the curtain and defend the subsidies — or stop pretending the public books aren’t being hollowed out.

Sources: The Register