Wisconsin lawmaker believes data center TIF exceptions won’t continue

(The Center Square) – A Wisconsin lawmaker says he believes future data center projects in the state won’t be using an exception to state law to put large-scale projects into tax increment districts. Rep. Shae Sortwell, R-Two Rivers, is currently pushing the end to sales tax breaks for data centers but voted to give exceptions to allow data centers in Beaver Dam and Port Washington the ability to enter TIDs despite being valued at more than 12% of the local property tax base. That 12% rule was put in place to ensure that municipalities cannot put large chunks of business property in a TID, where the increased property value from a development doesn’t initial go to the local tax base and it is instead captured and used for infrastructure or project costs. A separate proposal to give a blanket statewide exception to the 12% rule for data centers did not pass the Legislature. “My understanding at this point is the majority of any future data center will probably not utilize this,” Sortwell told The Center Square. An issue with the current exceptions, highlighted by a recent Wisconsin Policy Forum data center report, is that the process can increase property taxes for local residents in the short term as the increased property value is added to the property tax rolls but the increased property tax payments are retained by the TID. Municipalities have five years to increase taxes based on the new property value or they cannot do it later. Sortwell said that he voted for the pair of TID value cap extensions because it didn’t force the local municipality to do anything, it just allowed them to do it if they approved the measure. “If I was a local individual, which I guess I am, I wouldn’t support it,” Sortwell said. “But if that’s what they want to do, they can do it.” The increased property taxes from the data center contributing to the tax base only occurs when the tax increment district ends and if the data center is still operational at that point. “The TID district format is not great,” Sortwell said. “I think that needs to change as far as how TIDs actually work, especially for these larger projects.” One suggestion from the Wisconsin Policy Forum report is to allow local municipalities 10 years instead of five to increase taxes related to a property value increase due to projects in a TID, rather than keeping the current five-year rule. A Port Washington data center will more than double the municipality’s tax base while a Beaver Dam data center is projected to be equal to 59% of the current tax base there. Sortwell compared the state exception to a state law that allows counties to charge a 0.5% county sales tax, which 70 of 72 counties have done. “I’m not a huge fan of TIFs in general, to be perfectly honest,” Sortwell said. “But I understand why they exist. “Ultimately, what it came down to is this doesn’t force any municipality to do anything. All it says is that, if they want to take advantage of it, if they want to build a data center in the district, then it’s up to them.” The post Wisconsin lawmaker believes data center TIF exceptions won’t continue appeared first on Lake Country Tribune.