WEBVTT 1 00:00:09.000 --> 00:00:11.839 Hello, and welcome to this week's episode of the Texas 2 00:00:11.880 --> 00:00:16.079 trib Cast for Tuesday, April twenty eighth. I'm Eleanor Klibanoff, 3 00:00:16.280 --> 00:00:19.399 joined as always by editor in chief Matthew Watkins. I 4 00:00:19.399 --> 00:00:20.800 feel like it's been a little while since we've done 5 00:00:20.800 --> 00:00:21.519 an episode together. 6 00:00:22.039 --> 00:00:23.199 Did you enjoy your trip? 7 00:00:25.000 --> 00:00:29.160 I went to Dallas, the Dallas suburbs, Exaltica. I was 8 00:00:29.640 --> 00:00:32.799 up there for one thing, and then I'll tell that 9 00:00:32.840 --> 00:00:35.719 we heard Ken Paxton announced that he was doing an event, 10 00:00:36.039 --> 00:00:37.880 which you know, he doesn't do a ton of public events, 11 00:00:37.920 --> 00:00:40.920 even though he's campaigning for Senate, and so we they said, 12 00:00:40.920 --> 00:00:42.799 would you stick around for an extra day or two 13 00:00:43.039 --> 00:00:45.079 and you know, try. 14 00:00:44.920 --> 00:00:47.320 To see him? And uh, it was great. 15 00:00:47.399 --> 00:00:51.920 I spending two extra days in the Dallas suburbs has 16 00:00:52.399 --> 00:00:55.159 I was like, man, there's something deeply an eight in 17 00:00:55.200 --> 00:00:56.920 me that makes me want to see what another town's 18 00:00:56.960 --> 00:00:57.920 old navy looks like. 19 00:00:58.600 --> 00:00:59.799 And I'm gonna tell you this right now. It is 20 00:00:59.840 --> 00:01:00.920 the same as our old navy. 21 00:01:01.039 --> 00:01:04.159 That's funny because I feel like usually my experience when 22 00:01:04.200 --> 00:01:06.159 I hear about you traveling is that you're seeking out 23 00:01:06.280 --> 00:01:08.519 the nearest soda fountain. 24 00:01:08.760 --> 00:01:11.560 I did go to Swig. I went to Swig several times. 25 00:01:11.680 --> 00:01:13.480 They were like, will you stay for two extra days? 26 00:01:13.480 --> 00:01:15.640 And I said, can I what is my Swig budget 27 00:01:16.280 --> 00:01:17.200 for dirty sodas? 28 00:01:17.319 --> 00:01:19.879 And yeah, I blew through it, So please. 29 00:01:19.920 --> 00:01:21.920 I'm sure there are many people listening who have no 30 00:01:21.959 --> 00:01:23.760 idea what you're talking about, but that's okay, yep. 31 00:01:23.760 --> 00:01:26.799 If you're not from the Dallas suburbs or Mormon country, 32 00:01:27.120 --> 00:01:29.439 you should really introduce yourself to Swig, which is essentially 33 00:01:29.480 --> 00:01:32.719 just a soda with more calories added to it. 34 00:01:32.719 --> 00:01:33.200 It's great. 35 00:01:34.400 --> 00:01:37.680 Anyway, That's not what we're here to talk about this week. 36 00:01:37.760 --> 00:01:40.079 We are going to be diving into, honestly, one of 37 00:01:40.159 --> 00:01:44.480 the thorniest issues facing Texas right now, and an issue 38 00:01:44.519 --> 00:01:47.359 that looks really destined to define next year's legislative session 39 00:01:47.519 --> 00:01:51.319 and the political conversation for the next couple rounds. Over 40 00:01:51.319 --> 00:01:55.280 there in the capital data centers, Texas is currently on 41 00:01:55.359 --> 00:01:58.040 track to become the data center capital of the country, 42 00:01:58.319 --> 00:02:01.599 with more data center projects under instruction and announced than 43 00:02:01.680 --> 00:02:06.599 any other state. They're drawn here by plentiful land, minimal regulations, 44 00:02:06.680 --> 00:02:10.599 abundant tax breaks to the tune of about three point 45 00:02:10.680 --> 00:02:13.919 two billion dollars in sales tax revenue over the next 46 00:02:14.000 --> 00:02:19.879 two years alone. It's a very Texas sized problem, but 47 00:02:20.080 --> 00:02:23.680 not unique to Texas. It's something other states are wrestling 48 00:02:23.759 --> 00:02:27.039 with two. In fact, Virginia, the only state that currently 49 00:02:27.080 --> 00:02:30.000 has more data centers than we do, is locked in 50 00:02:30.120 --> 00:02:33.360 a huge budget impasse right now over whether to continue 51 00:02:33.360 --> 00:02:36.120 giving tax breaks to data centers, which sort of a 52 00:02:36.280 --> 00:02:39.520 foreshadow of what might come next January for us here 53 00:02:39.520 --> 00:02:42.400 in Texas, as we decide how much we want to 54 00:02:42.400 --> 00:02:44.719 welcome these data centers and how much we want to 55 00:02:44.759 --> 00:02:47.919 demand that they pay their share. 56 00:02:47.680 --> 00:02:48.240 To be here. 57 00:02:49.039 --> 00:02:51.599 To dig into this, we are joined by Paul Cobbler, 58 00:02:51.680 --> 00:02:55.080 the economy and industry reporter at the Texas Tribune. Hey, Paul, Hey, 59 00:02:55.120 --> 00:02:57.039 thanks for having me absolutely thanks for being here. 60 00:02:57.520 --> 00:03:00.560 Paul, you may not know got me sick last week. 61 00:03:00.680 --> 00:03:03.080 We had Soon as the podcast was over, I became 62 00:03:03.520 --> 00:03:05.080 terribly ill. And it's Pul's fault. 63 00:03:05.120 --> 00:03:07.159 Who knows the order of events here. I think someone 64 00:03:07.199 --> 00:03:08.240 else got me sic too. 65 00:03:09.039 --> 00:03:11.280 We had a chain of illness like whip through the 66 00:03:11.319 --> 00:03:13.759 Texas Tribune last week, which is why I was like, 67 00:03:13.800 --> 00:03:15.120 I will stay in North Texas. 68 00:03:15.280 --> 00:03:19.439 You guys all seem disgusting. We are also joined. 69 00:03:19.159 --> 00:03:22.759 By a very special guest, Charles Pollin, a Virginia based 70 00:03:22.800 --> 00:03:25.879 reporter for Inside Climate News who has been reporting on 71 00:03:25.919 --> 00:03:28.800 this very same issue a few hundred miles north. 72 00:03:29.000 --> 00:03:30.159 Charles, thanks for joining us. 73 00:03:31.039 --> 00:03:33.919 Hey everyone, thanks for having me. Glad to be meeting 74 00:03:33.919 --> 00:03:38.919 over zoom and not contributing or receiving the sickness. I guess, yes, yes. 75 00:03:39.039 --> 00:03:39.680 Yes, you're safe. 76 00:03:40.800 --> 00:03:41.919 Yeah. How are things in Virginia. 77 00:03:41.919 --> 00:03:43.560 I mean, we'll talk about the data centers, but generally, 78 00:03:43.560 --> 00:03:45.240 you guys are in the midst of a legislative session. 79 00:03:46.039 --> 00:03:49.680 Yeah, well, I guess a special session. We had our 80 00:03:49.960 --> 00:03:53.520 regular session for this year between January and March. It's 81 00:03:53.560 --> 00:03:57.439 a short one. It's a part time legislature here, either 82 00:03:57.479 --> 00:04:02.800 forty five or sixty days, wrapped up in March and 83 00:04:02.960 --> 00:04:05.360 got some bills across. They went to the governor. We're 84 00:04:06.120 --> 00:04:09.919 undergoing some final tweaks or final decisions from the governor 85 00:04:10.159 --> 00:04:15.120 about those now and more broadly, overarching, all that was 86 00:04:15.400 --> 00:04:19.600 work that was left undone on the budget regarding data 87 00:04:19.639 --> 00:04:20.519 center tax exemption. 88 00:04:22.040 --> 00:04:24.759 Yeah. It's funny and I feel like Texas sort of 89 00:04:25.079 --> 00:04:29.120 created this redistricting fight the Virginia is having, and you 90 00:04:29.160 --> 00:04:32.519 guys are having this data center fight that we're going 91 00:04:32.600 --> 00:04:35.639 to have, so a real two way street for ruining 92 00:04:35.720 --> 00:04:37.000 political reporters' lives. 93 00:04:37.120 --> 00:04:38.079 It's great. 94 00:04:39.040 --> 00:04:41.600 Yeah, it's been a busy one, I guess. Yeah, we're 95 00:04:41.639 --> 00:04:43.439 horse trading on who can take the lead on what. 96 00:04:45.319 --> 00:04:47.959 There's some hope that with that being settled last week 97 00:04:48.000 --> 00:04:53.040 here in Virginia, that that might open up negotiations and 98 00:04:53.079 --> 00:04:55.879 allow people to focus in on this issue. I should say, 99 00:04:56.279 --> 00:04:59.360 our redistricting effort is still being reviewed by the courts. 100 00:04:59.439 --> 00:05:03.000 There was a here on Monday, so TVD on it 101 00:05:03.040 --> 00:05:07.279 fift holes or not. But we're moving along way. 102 00:05:08.240 --> 00:05:11.639 It's a you know, I never saw so many connections 103 00:05:11.639 --> 00:05:15.519 between Virginia and Texas. But Paul, maybe you can start 104 00:05:15.560 --> 00:05:18.120 with sort of the basics, like this where data centers 105 00:05:18.120 --> 00:05:20.279 get thrown around a lot when we're talking about data centers, 106 00:05:20.319 --> 00:05:22.439 what do we mean? And like, why is this issue 107 00:05:22.519 --> 00:05:23.560 suddenly here? 108 00:05:23.879 --> 00:05:25.560 Yeah, So data centers are not a new thing. 109 00:05:26.160 --> 00:05:27.800 I think it's a thing that's kind of entered the 110 00:05:27.800 --> 00:05:30.560 public consciousness in the past couple of years, obviously as 111 00:05:30.560 --> 00:05:32.560 they've gotten much larger. But when you when you think 112 00:05:32.560 --> 00:05:34.920 of a data center, it's you know, really it's just 113 00:05:35.079 --> 00:05:37.480 sort of the the memory of the Internet is maybe 114 00:05:37.480 --> 00:05:40.040 the easiest metaphor to use here that it's kind of 115 00:05:40.079 --> 00:05:43.079 like all the servers, you know, the cloud storage infrastructure, 116 00:05:43.160 --> 00:05:45.759 sort of like the Internet is a physical thing, even 117 00:05:45.800 --> 00:05:47.720 though we think of it as being out in the ether, 118 00:05:47.879 --> 00:05:50.639 but there is equipment that makes all of this happen, 119 00:05:50.680 --> 00:05:52.519 that stores all of this data, and that is essentially 120 00:05:52.600 --> 00:05:55.680 what a data center is. And in the kind of 121 00:05:55.720 --> 00:05:58.360 recent terms that people are thinking about is just as 122 00:05:58.480 --> 00:06:01.279 the Internet has become more intense, largely because of the 123 00:06:01.360 --> 00:06:03.240 rise of AI and all of the computing power that 124 00:06:03.240 --> 00:06:05.759 that takes, data centers are getting a lot bigger and 125 00:06:05.759 --> 00:06:07.160 people are starting to notice them. 126 00:06:07.720 --> 00:06:08.680 Yeah, it's super interesting. 127 00:06:08.720 --> 00:06:10.759 It feels like, I mean, we have this with a 128 00:06:10.759 --> 00:06:12.920 lot of things at the legislature, but it's like suddenly 129 00:06:12.959 --> 00:06:14.639 everyone has to get very up to speed on a 130 00:06:14.680 --> 00:06:16.839 new niche thing that we didn't really pay that much 131 00:06:16.879 --> 00:06:19.680 attention to, which is I mean, you did this story 132 00:06:19.680 --> 00:06:21.439 about these tax breaks, and it was one of the 133 00:06:21.439 --> 00:06:24.360 things I found interesting about this is like this was 134 00:06:24.360 --> 00:06:26.240 not a thing that people were paying them, like a 135 00:06:26.319 --> 00:06:28.439 law passed and no one paid that much attention. 136 00:06:28.519 --> 00:06:31.199 And now suddenly it's super relevant. Can you talk a 137 00:06:31.199 --> 00:06:31.920 little bit about that. 138 00:06:32.160 --> 00:06:34.759 Yeah, So the tax break that we're talking about here 139 00:06:34.839 --> 00:06:38.360 was actually passed in twenty thirteen during that year's legislative session. 140 00:06:38.399 --> 00:06:40.720 That was about the same time that Virginia was passing 141 00:06:40.759 --> 00:06:42.639 its own sales tax break and a bunch of other 142 00:06:42.959 --> 00:06:45.319 states around the country. This was at the time really 143 00:06:45.360 --> 00:06:48.480 an emerging industry. This was something that you know, states 144 00:06:48.519 --> 00:06:51.759 looked upon as a source of you know, economic development 145 00:06:51.800 --> 00:06:54.600 of sales tax revenue, sorry, of tax revenue, not sales 146 00:06:54.639 --> 00:06:57.639 tax revenue. And you know, there was a reason to 147 00:06:57.680 --> 00:07:00.839 try to bring and draw these things here. And that 148 00:07:00.959 --> 00:07:04.920 first full year in twenty fourteen, after that tax break 149 00:07:05.199 --> 00:07:07.680 was passed, it was valued at about five. 150 00:07:07.519 --> 00:07:08.959 Point four million dollars. 151 00:07:10.279 --> 00:07:12.360 So really, I mean, when we're talking in the context of, 152 00:07:12.399 --> 00:07:14.079 like you said, three point two billion dollars over the 153 00:07:14.079 --> 00:07:16.439 next two years, I mean, it was it was basically pennies. 154 00:07:16.439 --> 00:07:18.040 I mean, obviously I'd love to have five point four 155 00:07:18.040 --> 00:07:22.319 million dollars, but you know, and it has just ballooned 156 00:07:22.399 --> 00:07:24.480 in size, very slowly kind of over the course of 157 00:07:24.519 --> 00:07:26.680 a decade, but just in the last three years, it is, 158 00:07:26.759 --> 00:07:29.279 it has really grown. And again you know, this is 159 00:07:29.319 --> 00:07:31.600 sort of like we're talking about, is as these things 160 00:07:31.600 --> 00:07:33.959 get bigger, as the tax breaks get bigger, people start 161 00:07:34.000 --> 00:07:35.839 paying attention and noticing. 162 00:07:36.000 --> 00:07:39.759 It's sort of like passing a law like two years 163 00:07:39.759 --> 00:07:42.240 before the iPhone comes out that says like, you know, 164 00:07:42.360 --> 00:07:45.040 no sales tax on like things you buy on your phone, 165 00:07:45.199 --> 00:07:48.319 right right, Like no one anticipating that you know, we're 166 00:07:48.319 --> 00:07:51.439 going to essentially just like completely change the way that 167 00:07:51.759 --> 00:07:54.160 this works and you know, have this massive expansion. 168 00:07:54.720 --> 00:07:58.040 Yeah, that's a great metaphor of just like you're like, oh, sure, 169 00:07:58.839 --> 00:08:01.120 why not come on it, and now you're like, oh no, 170 00:08:01.680 --> 00:08:03.319 we're being like deluged with this. 171 00:08:03.439 --> 00:08:05.720 Well, I thought the funny one of the funnier parts 172 00:08:05.759 --> 00:08:07.399 of the reporting for that story was I spoke to 173 00:08:07.439 --> 00:08:10.800 the bill's author, Harvey Hildebrand, and he was joking with 174 00:08:10.800 --> 00:08:12.199 me that he was like, you know, they did say 175 00:08:12.240 --> 00:08:13.800 it would take you know, ten fifteen years and we'd 176 00:08:13.839 --> 00:08:15.879 probably be the number one market. This is maybe the 177 00:08:15.879 --> 00:08:17.800 most successful bill I ever authored while I was in 178 00:08:17.839 --> 00:08:20.319 the legislature. And he was, you know, joking about that, 179 00:08:20.360 --> 00:08:22.160 but you know, I think it's true that it's it 180 00:08:22.240 --> 00:08:23.160 certainly is worked. 181 00:08:23.399 --> 00:08:28.120 Yeah, or like extremely impactful. Yeah, so we now have 182 00:08:28.759 --> 00:08:30.519 as you said, this has exploded. We'd sort of set 183 00:08:30.600 --> 00:08:34.879 up this you're this huge sales tax exemption, which maybe 184 00:08:34.919 --> 00:08:36.759 was not the original intent for it to be quite 185 00:08:36.759 --> 00:08:40.399 that large. What are you hearing from lawmakers about sort 186 00:08:40.440 --> 00:08:43.639 of what are the animating sides of this issue? 187 00:08:44.000 --> 00:08:46.559 Yeah, I mean the lawmakers I have spoken to this 188 00:08:46.639 --> 00:08:48.000 is it's like you said, I think a lot of 189 00:08:48.039 --> 00:08:49.799 them are kind of getting caught up to speed. I 190 00:08:49.799 --> 00:08:52.000 think it's a lot of sort of like we need 191 00:08:52.039 --> 00:08:54.360 to get our arms around this issue. But the numbers, 192 00:08:54.440 --> 00:08:56.039 you know, when they when they look at this three 193 00:08:56.039 --> 00:08:58.080 point two billion dollars over the next two years, when 194 00:08:58.080 --> 00:08:59.840 they look at how much it's ballooned in size, which 195 00:08:59.840 --> 00:09:02.080 we can talk about a little later, just over the 196 00:09:02.120 --> 00:09:05.240 past couple of years, that you know, their eyes pop 197 00:09:05.320 --> 00:09:08.200 and they're like, this certainly does not look right to me. So, 198 00:09:08.279 --> 00:09:10.919 you know, I've heard from a number of legislators, from 199 00:09:11.120 --> 00:09:13.960 state Senator Joan Huffman, who's chair of the Finance Committee, 200 00:09:14.000 --> 00:09:16.679 which is one of the key committees in any tax break, 201 00:09:17.879 --> 00:09:20.639 you know, repealing or reworking would go through, and she 202 00:09:20.799 --> 00:09:22.879 is she said she would be open to repealing it, 203 00:09:23.000 --> 00:09:24.600 or the very least taking a look at it. 204 00:09:24.879 --> 00:09:25.720 Same on the House. 205 00:09:25.519 --> 00:09:28.039 Ways and Mean side, a lot of the members of 206 00:09:28.039 --> 00:09:29.879 that committee have also said about the same. I mean, 207 00:09:29.919 --> 00:09:32.639 this is definitely something that they are taking a look at, 208 00:09:33.000 --> 00:09:35.240 but I think they're kind of treating this next you know, 209 00:09:35.320 --> 00:09:37.120 how many months is it, like seven months or so 210 00:09:37.519 --> 00:09:40.240 before the legislative session starts to kind of wrap their 211 00:09:40.320 --> 00:09:41.879 arms around it and figure out what they want to do. 212 00:09:43.759 --> 00:09:46.080 Charles, I mean, what are sort of as again, you 213 00:09:46.120 --> 00:09:48.720 guys are sort of living through our future. What have 214 00:09:48.799 --> 00:09:53.000 been sort of the battle lines around this issue in Virginia. 215 00:09:53.159 --> 00:09:56.159 Yeah, so I'll say it's a very similar story to Texas, 216 00:09:56.200 --> 00:09:59.879 you know, wanting to create economic development and like to 217 00:10:00.080 --> 00:10:02.879 thousand and eight here in Virginia and it's exploded to 218 00:10:02.919 --> 00:10:07.039 this huge market. You know, the data center industry really 219 00:10:07.120 --> 00:10:10.519 likes Virginia because there's a strong fiber network. It's right 220 00:10:10.600 --> 00:10:14.600 next to there's strong fiber network here, it's next to 221 00:10:14.639 --> 00:10:17.519 the capital, so it stores a lot of information for 222 00:10:17.600 --> 00:10:23.559 the government. There's relatively cheap power, and there relaxed land laws, 223 00:10:24.879 --> 00:10:30.879 land use laws with localities, and so it really blossomed 224 00:10:31.919 --> 00:10:34.960 and grew to its world leading market now and that's 225 00:10:34.960 --> 00:10:39.240 brought local tax revenue to local governments. Up in Louden 226 00:10:39.320 --> 00:10:42.360 County where a majority of the data centers are, it's 227 00:10:42.360 --> 00:10:45.840 about an hour west of Washington d c UH. They 228 00:10:45.840 --> 00:10:49.440 get about a billion dollars in revenue from localities are 229 00:10:49.440 --> 00:10:53.639 from data centers and that goes towards schools and other 230 00:10:54.080 --> 00:10:58.559 critical services that they want to provide. And so counties 231 00:10:58.600 --> 00:11:01.000 have really grabbed a hold of that. And then the 232 00:11:01.080 --> 00:11:06.240 labor unions really like the work too. These electricians he's 233 00:11:06.240 --> 00:11:11.679 building in trade construction workers see you know, I guess 234 00:11:11.759 --> 00:11:15.919 good jobs. They talk about the perform the work agreements 235 00:11:15.960 --> 00:11:20.600 with the companies and how the salaries are higher. So 236 00:11:20.720 --> 00:11:25.240 the economic factor has really been driving this. But people 237 00:11:25.240 --> 00:11:31.159 are waking up to the increases in utility rates for 238 00:11:31.279 --> 00:11:34.480 customers to kind of build out the infrastructure, the concerns 239 00:11:34.519 --> 00:11:38.960 about water use that these data centers need for cooling 240 00:11:40.039 --> 00:11:43.200 and then air quality for when they're using backup diesel generators. 241 00:11:44.080 --> 00:11:47.799 So there's a lot of like external costs that the 242 00:11:47.879 --> 00:11:52.360 environment and people might have to deal with. And this 243 00:11:52.519 --> 00:11:57.399 senator here in Virginia is a very bold, fire brand legislature. 244 00:11:57.480 --> 00:12:00.279 She wants to kind of rein in some of that 245 00:12:00.360 --> 00:12:04.840 data center development and generate some revenue for the state 246 00:12:05.000 --> 00:12:08.919 that is dealing with, you know, budget shortfalls and what's 247 00:12:08.919 --> 00:12:12.799 to fund some additional core services. So it's really a 248 00:12:12.799 --> 00:12:16.600 fight kind of between her and the industry on how 249 00:12:16.679 --> 00:12:21.159 much money the state should get, and also with local 250 00:12:21.200 --> 00:12:25.320 governments and other lawmakers who want to keep the economic 251 00:12:25.399 --> 00:12:28.240 development going and preserve Virginia's reputation. 252 00:12:30.360 --> 00:12:32.600 How does that sort of compare to what we're seeing here. 253 00:12:32.759 --> 00:12:35.159 It all sounds very familiar, you know. 254 00:12:35.240 --> 00:12:38.639 I think the sort of the arguments on the pro 255 00:12:38.919 --> 00:12:41.679 data center side, like Charlie was talking about it certainly 256 00:12:41.759 --> 00:12:44.639 is they point to this tax revenue at the local level. 257 00:12:44.639 --> 00:12:47.759 I think it's about thankfully easy to remember about three 258 00:12:47.759 --> 00:12:51.200 point two billion dollars that a commissioned studied by the 259 00:12:51.240 --> 00:12:53.840 Data Center Coalition, which is basically a trade association of 260 00:12:53.879 --> 00:12:56.919 all the top tech companies that you know, build a 261 00:12:56.960 --> 00:12:59.000 lot of these data centers. They say they contribute about 262 00:12:59.000 --> 00:13:02.879 three point two billion dollars and local revenue about in 263 00:13:02.919 --> 00:13:05.519 twenty twenty four. This what it would have been. So 264 00:13:05.799 --> 00:13:07.759 that's sort of part of the argument that there is 265 00:13:07.879 --> 00:13:10.519 a lot of money that is still going into you know, 266 00:13:10.600 --> 00:13:14.799 city and county coffers on one hand, and then also 267 00:13:15.200 --> 00:13:16.600 you know, we've seen a lot of these sort of 268 00:13:16.679 --> 00:13:21.480 local fights happening where trade unions are also arguing in 269 00:13:21.519 --> 00:13:23.960 favor of having data centers. You know, I think part 270 00:13:23.960 --> 00:13:26.159 of the argument against data centers is that construction jobs 271 00:13:26.159 --> 00:13:28.000 are quote unquote temporary. But I think you you know, 272 00:13:28.039 --> 00:13:30.799 tell that to a construction worker, all of their work 273 00:13:30.879 --> 00:13:33.519 is temporary. And then plumbers and electricians, like we have 274 00:13:33.519 --> 00:13:35.039 a shortage of them now, and a lot of these 275 00:13:35.799 --> 00:13:37.799 companies that are coming in and building data centers are 276 00:13:37.799 --> 00:13:41.600 announcing sort of like career programs to train more electricians 277 00:13:41.600 --> 00:13:44.000 than plumbers because they say they need them. So there 278 00:13:44.080 --> 00:13:47.440 is there is sort of like this whole discussion I 279 00:13:47.559 --> 00:13:50.440 found honestly so interesting just because it's it's really a 280 00:13:50.440 --> 00:13:53.559 discussion of trade offs. You know, are we getting our 281 00:13:53.600 --> 00:13:56.519 money's worth for the amount of money that we are 282 00:13:56.559 --> 00:13:59.840 forgoing in this in this tax break, and you know, 283 00:14:00.039 --> 00:14:02.559 when you think about the water use, the electricity use, 284 00:14:02.679 --> 00:14:05.799 the questions about rising rates, but also the job creation, 285 00:14:06.360 --> 00:14:09.279 the local tax revenue, so on and so forth, And 286 00:14:09.399 --> 00:14:11.000 so I think that's kind of what the legislators need 287 00:14:11.039 --> 00:14:13.559 to figure out is what is the right balance here? 288 00:14:13.600 --> 00:14:15.600 And I think the argument is that that balance isn't 289 00:14:15.679 --> 00:14:17.240 quite there right now. 290 00:14:17.360 --> 00:14:19.360 Do you get a sense of how much of this 291 00:14:19.639 --> 00:14:22.960 is actually being driven by the tax breaks or how 292 00:14:23.000 --> 00:14:26.039 much it's just being taken advantage of by the companies 293 00:14:26.120 --> 00:14:29.159 who might locate here otherwise, Like I spent some time 294 00:14:29.159 --> 00:14:31.799 in West Texas recently talked to some people involved in 295 00:14:31.840 --> 00:14:34.879 the development of data centers. The tax breaks actually didn't 296 00:14:34.919 --> 00:14:37.679 come up that much. What came up more was there's 297 00:14:37.720 --> 00:14:40.519 a lot of land in Texas which makes it very attractive, 298 00:14:41.559 --> 00:14:43.639 particularly in that part of the state there close to 299 00:14:43.679 --> 00:14:46.320 the Permian Basin, where there is you know, a massive 300 00:14:46.320 --> 00:14:49.159 amounts of cheap natural gas which can be used to 301 00:14:49.240 --> 00:14:53.960 power these plants. There's obviously the regulatory environment that you know, 302 00:14:54.399 --> 00:14:56.559 not a lot of restrictions on land use, particularly in 303 00:14:56.600 --> 00:14:58.759 the rural areas of the state, which can allow these 304 00:14:58.799 --> 00:15:01.639 things to be easier to build, fewer hoops to jump through. 305 00:15:02.000 --> 00:15:04.000 Do you have any sense as to how much those 306 00:15:04.080 --> 00:15:07.600 factors are driving this compared to you know, we can 307 00:15:07.639 --> 00:15:09.840 save three point two billion dollars in sales taxes. 308 00:15:09.960 --> 00:15:12.519 Yeah, I think it's hard to know. For certain unless 309 00:15:12.519 --> 00:15:14.759 the sales tax break goes away. And there are arguments 310 00:15:14.759 --> 00:15:16.799 on either side. But I think one recent example that 311 00:15:16.879 --> 00:15:19.279 really sticks out to me is in Hood County. They 312 00:15:19.480 --> 00:15:23.360 recently a data center was pursuing a local tax break 313 00:15:23.360 --> 00:15:25.480 that was rejected by the Commissioner's Court after a lot 314 00:15:25.480 --> 00:15:29.039 of resistance by locals there, and the data center is 315 00:15:29.080 --> 00:15:31.039 they're still going out with the construction. They were like, Okay, 316 00:15:31.080 --> 00:15:33.840 well that's unfortunate, but you know, they're still building it. 317 00:15:33.919 --> 00:15:36.519 And you know, talking to a lot of tax experts 318 00:15:36.559 --> 00:15:39.200 sort of about just like economic development in general, you know, 319 00:15:39.240 --> 00:15:41.399 this is a really common fight across a lot of 320 00:15:41.399 --> 00:15:45.840 industries of whether we need to be foregoing tax revenue 321 00:15:45.879 --> 00:15:49.039 to bring X industry here. And the argument that I've 322 00:15:49.519 --> 00:15:53.080 heard from some tax experts is basically that states, local 323 00:15:53.120 --> 00:15:57.440 governments so on, like they have more leverage now really 324 00:15:57.480 --> 00:15:59.639 than they will at any point, just because of the 325 00:15:59.679 --> 00:16:01.720 sort of you know, desperation is maybe too strong of 326 00:16:01.759 --> 00:16:04.159 a word, but the rush right now to build these 327 00:16:04.200 --> 00:16:06.960 data centers. These companies are trying to build as many 328 00:16:06.960 --> 00:16:09.519 of them as quickly as they can, and so this 329 00:16:09.679 --> 00:16:13.120 idea that they are going to you know that I 330 00:16:13.159 --> 00:16:15.240 was reading about Virginia and then same in Texas. The 331 00:16:15.639 --> 00:16:17.600 Data Center coalition folks have said, if you get rid 332 00:16:17.639 --> 00:16:20.120 of these tax breaks, that's an end to the investment 333 00:16:20.120 --> 00:16:22.639 in this state. But you know, I don't think they 334 00:16:22.639 --> 00:16:26.840 can afford to just forego two of their largest markets 335 00:16:26.879 --> 00:16:28.480 if they get rid of these tax breaks, because they 336 00:16:28.519 --> 00:16:31.039 are trying to build so quickly, so many for all 337 00:16:31.039 --> 00:16:32.919 the reasons that Matthew just said. 338 00:16:33.039 --> 00:16:34.759 Yeah, I mean, it's interesting because like you do sort 339 00:16:34.799 --> 00:16:36.879 of need Like let's say Virginia is like, we're going 340 00:16:36.960 --> 00:16:39.399 to get rid of this tax break, but Texas doesn't. Right, 341 00:16:39.519 --> 00:16:43.000 Like maybe within that you say, oh, well, now Texas. 342 00:16:42.639 --> 00:16:46.080 Is a little bit more appealing. But if everyone. 343 00:16:45.679 --> 00:16:49.240 Suddenly starts like looking at this again, and like I mean, Charles, 344 00:16:49.320 --> 00:16:51.639 I'm I know your stories have mentioned this, but like 345 00:16:51.960 --> 00:16:55.480 it doesn't like there's a decent amount of So I 346 00:16:55.559 --> 00:16:57.200 want to call it fear mongering because I'm sure there's 347 00:16:57.200 --> 00:16:59.480 some truth to it, but fear being raised by the 348 00:16:59.519 --> 00:17:02.960 industry Virginia that's like, well, Texas still has this, Illinois 349 00:17:02.960 --> 00:17:06.480 still has this. Like how much is Virginia feeling that 350 00:17:06.559 --> 00:17:08.720 heat of Well they might go to other states. 351 00:17:09.359 --> 00:17:12.680 Yeah, that's very much part of the conversation here. I mean, 352 00:17:12.680 --> 00:17:16.799 this industry is highly competitive first and foremost too. You know, 353 00:17:16.839 --> 00:17:19.160 they want to build really fast and get these programs 354 00:17:19.200 --> 00:17:23.960 developed and advance their models. From what I understand, so 355 00:17:24.400 --> 00:17:27.880 they're saying, look, if we aren't going to be respected 356 00:17:27.920 --> 00:17:31.480 and have our old contracts honored with an abrupt end 357 00:17:31.480 --> 00:17:36.759 to this sales tax exemption, we'll just go elsewhere. The Senator, 358 00:17:36.799 --> 00:17:41.240 Senator Luis Lucas here in Virginia kind of punches back, 359 00:17:41.279 --> 00:17:44.960 if you will, and says like, well, go ahead, call 360 00:17:45.000 --> 00:17:47.799 my bluff, call our bluff. You're not really going to 361 00:17:47.880 --> 00:17:51.079 go anywhere because of all the infrastructure and everything here. 362 00:17:52.720 --> 00:17:58.200 So that's where it's really gotten tense, and we're I 363 00:17:58.200 --> 00:18:00.599 guess going to see who can who can buy first. 364 00:18:00.640 --> 00:18:05.400 I'll say it does seem pretty consequential to these companies 365 00:18:05.480 --> 00:18:10.480 that want to be highly profitable and their bottom lines 366 00:18:11.799 --> 00:18:14.519 from what I gathered here in Virginia, like in northern 367 00:18:14.599 --> 00:18:16.920 Virginia where a lot of them want to cite UH 368 00:18:16.960 --> 00:18:20.079 and be located UH land values have to increase quite 369 00:18:20.119 --> 00:18:24.279 a lot. I think Amazon just bought a old George 370 00:18:24.319 --> 00:18:28.799 Washington University campus for like four hundred and twenty five 371 00:18:28.839 --> 00:18:33.400 million dollars, and so if there's any other way to 372 00:18:33.400 --> 00:18:36.680 eke out a few dollars and cents with the tax exemption, 373 00:18:36.920 --> 00:18:40.039 which you know applies to their computer equipment, maybe even 374 00:18:40.079 --> 00:18:44.279 some of their backup generators that are crucial that can 375 00:18:44.359 --> 00:18:49.519 help them, you know, and their business case. So it's 376 00:18:49.559 --> 00:18:52.200 it's kind of nitpicky, but it's part of the big 377 00:18:52.240 --> 00:18:55.640 calculation you know that these companies UH are are factoring. 378 00:18:56.440 --> 00:18:59.240 Is there any benefit to having the data center in 379 00:18:59.279 --> 00:19:04.440 your state beyond the tax revenue? I mean, is there 380 00:19:04.640 --> 00:19:07.519 is there anything to the idea of you know, you 381 00:19:07.599 --> 00:19:09.400 want this built, they're going to build it somewhere, so 382 00:19:09.440 --> 00:19:10.960 you'd rather than build it here. 383 00:19:12.359 --> 00:19:12.839 There? 384 00:19:12.920 --> 00:19:16.519 There is definitely like these fiber opt like It's like 385 00:19:16.640 --> 00:19:19.160 Charlie said that they have the fiber optic cables in Virginia, 386 00:19:19.200 --> 00:19:20.640 so that that is like one of the things that 387 00:19:20.680 --> 00:19:23.119 makes it more appealing. And you know it, it is 388 00:19:23.279 --> 00:19:26.599 true that the Internet takes time to travel, so having 389 00:19:26.839 --> 00:19:29.319 data centers closer by like that helps with a lot 390 00:19:29.319 --> 00:19:33.480 of these operations. But yeah, I mean, past that, the 391 00:19:33.519 --> 00:19:35.559 appointed job growth. It's like we talked about, there are 392 00:19:35.559 --> 00:19:37.400 certainly these gig jobs that are created, there are these 393 00:19:37.400 --> 00:19:41.440 construction jobs, and then it's the tax revenue, and you know. 394 00:19:41.960 --> 00:19:45.000 Not an insignificant thing, particularly in places where you know, 395 00:19:45.720 --> 00:19:48.200 a lot of these are having in rural communities where 396 00:19:48.440 --> 00:19:51.279 you know, the schools and other areas are really struggling 397 00:19:51.400 --> 00:19:54.440 right now and they want to see that revenue come in. 398 00:19:54.920 --> 00:19:55.079 Yeah. 399 00:19:55.119 --> 00:19:57.599 I mean I did a story last year about like 400 00:19:57.599 --> 00:19:59.519 small town in West Texas that is seen. I mean, 401 00:19:59.559 --> 00:20:01.720