WASHINGTON, Oct. 11, 2016 /PRNewswire-USNewswire/ -- States and localities are giving tech giants an average of $2 million per job for data centers. Indeed, the companies are so aggressive playing states against each other that more than half the states have even enacted new data center-specific tax break programs. But the companies actually care most about cheap electricity and stable settings, not taxpayer subsidies. Public officials should cap data center subsidies at $50,000 per job and be ready to walk away from bidding wars that guarantee net losses for taxpayers.
Those are the main findings and recommendations of Money Lost to the Cloud: How Data Centers Benefit from State and Local Government Subsidies, a study released today by Good Jobs First and available at www.goodjobsfirst.org/datacenters.
Profiling 11 data center "megadeals," the study finds that Google, Microsoft, Facebook, Apple and Amazon Web Services have been awarded more than $2 billion in state and local incentives. The average cost these "megadeals" is $1.95 million per job. The actual subsidy costs of many deals, however, is much higher but unknown, since some states and localities fail to project or disclose aggregate program costs, much less company-specific costs of deals.
The study also reviews data center-specific tax break programs in 27 states and finds irregular disclosure practices. Washington State's program, at $57.4 million in fiscal year 2016, is the most expensive.
"High-profile companies are trading on their fame to win huge tax breaks in poor rural areas, while communities are coming to the rude awakening that data centers create very few jobs, and many of the best jobs are filled by people transferred in," said Kasia Tarczynska, research analyst at Good Jobs First and the author of the study.
The report recommends disclosure of deal-specific and aggregate program costs and a cap on state and local subsidies combined at $50,000 per permanent job. The report also urges public officials to walk away from excessive data center subsidy demands.
The study was funded by the Surdna Foundation's Strong Local Economies program. The findings and recommendations are solely those of Good Jobs First.
Good Jobs First is a non-profit, non-partisan resource center promoting accountability in economic development. Founded in 1998, it is based in Washington DC.
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SOURCE Good Jobs First