Statement from Sen. Andrew Mathews on recent data center legislation in Minnesota:

The sales tax exemption on electricity for data centers is being repealed through HF 9, the Tax Bill. I strongly oppose this change. It’s effectively a major tax increase on data centers already operating in Minnesota and will deter future investment. 

Separately, HF 16—the data center bill—includes a provision extending the sales tax exemption on qualified equipment from 20 to 35 years. While that’s a step in the right direction, it is not a satisfactory exchange for the loss of the electricity exemption. The bill also adds new annual fees on data centers, new tariffs, new regulations and mandates, which will raise costs even further for developers. I voted against the bill because it fails to provide the regulatory certainty data centers need and doesn’t offer strong enough incentives to attract new investment to Minnesota.

Throughout the session, I worked closely with stakeholders in the data center industry, local officials in Becker, and state agencies to develop legislation that would bring regulatory clarity and attract new projects to Minnesota. Many of these proposals had bipartisan support. Senator Frentz and I collaborated on several provisions that were initially included in the Energy Omnibus bill. Unfortunately, those provisions were stripped out late in session, and we were blindsided by the repeal of the electricity exemption.

One of the key reforms I focused on was streamlining the permitting process. For example, Amazon’s proposed data center in Becker required diesel generators for emergency backup power. These generators would rarely run, but under current law, the project was treated as a power plant simply because of that backup capacity even though the power isn’t tied to the grid and only serves one facility. That classification triggered the requirement for a Certificate of Need, a long and burdensome process. My legislation would have exempted data centers from that requirement, giving developers the certainty they need to move forward.

Unfortunately, that effort was derailed by exaggerated claims about environmental impacts on water, noise, and air quality that don’t reflect how modern data centers operate.

Since then, Amazon has announced a $20 billion data center in Pennsylvania and a $10 billion project in North Carolina. Meanwhile, Minnesota continues to miss out. If we don’t reverse course by reducing regulatory red tape and restoring tax incentives, we’re going to watch this next wave of economic growth pass us by.

In Becker, the closure of the Sherco Power Plant will leave a massive hole in the tax base. The Amazon data center could have helped fill that gap and supported our schools and local economy. It’s incredibly frustrating to see our community step up with smart, forward-thinking solutions only to get blocked again and again.

Even with the 15-year extension on equipment exemptions, we’re not doing enough to attract or retain these high-value projects. I’ll continue fighting for policies that support Becker, promote investment, and keep Minnesota competitive in the evolving digital economy.