LANSING, Mich. (WOWO) — Tax incentives that helped attract large-scale data center development to Michigan could be eliminated under legislation being pursued by a state senator who says taxpayers deserve more transparency and corporations should not receive special treatment.

State Sen. Jim Runestad plans to introduce legislation that would repeal sales and use tax exemptions available to qualifying data center projects in Michigan according to News10 Lansing.

The incentives were created through legislation introduced in 2023 and approved by the governor on the final day of 2024. Supporters say the tax breaks are designed to attract major investments and position Michigan as a destination for the rapidly expanding data center industry.

Critics argue the state is giving up tax revenue to companies with the financial resources to build multibillion-dollar facilities without government assistance.

“Why is the state underwriting these multi-billion dollar corporations that have unlimited money to build these data centers?” Runestad said.

Runestad is seeking to repeal provisions contained in both House Bill 4096 and Senate Bill 237.

House Bill 4096 provides a sales and use tax exemption for qualifying purchases of data center equipment. The legislation also restricts the Michigan Strategic Fund from releasing certain information that could identify a particular person or data center.

Those provisions have become a central point of disagreement between lawmakers.

Runestad argues taxpayers should be able to see more information about the incentives being provided to data center developers, including the value of the tax breaks.

“The corruption is off the charts. Why is it off the charts? The same reason always, money,” Runestad said.

Supporters of the existing law say the limits on disclosure are intended to protect sensitive business information and national security.

State Rep. Joey Andrews, a Democrat from St. Joseph who sponsored House Bill 4096, said publicly releasing detailed information about individual projects could provide competitors or foreign adversaries with information about how data centers operate and how much they are investing.

“You can glean quite a bit from what these projects look like based on what they’re spending money on, how much they’re spending, when they spend it,” Andrews said.

Andrews said the restrictions were intended in part to prevent countries such as China or other potential adversaries from obtaining information that could reveal sensitive details about data center projects.

The incentives have already played a role in attracting major development to Michigan.

Among the projects benefiting from the state’s data center incentives is the Stargate data center planned for Saline Township. The project is being developed by OpenAI, Oracle and Related Digital.

The proposed repeal comes as Michigan and other states compete for enormous investments in data centers that support cloud computing and artificial intelligence.

Business groups supporting the incentives say those facilities can bring significant capital investment and economic activity to the state.

Mike Alaimo, vice president of legislative and external affairs for the Michigan Chamber of Commerce, described hyperscale data centers as a “massive opportunity” for Michigan.

Alaimo said the state needs new investment and argued that data centers can become an important part of Michigan’s economic recovery.

He warned that eliminating the incentives could send a negative message to companies considering Michigan for future development.

Alaimo said Michigan risks appearing to be “not open for business” if lawmakers repeal incentives after companies have made investment decisions based on the state’s existing policies.

He also acknowledged that additional transparency could be appropriate.

But Alaimo said other states have taken approaches that provide even less information or fewer protections for consumers and taxpayers.

He pointed to energy costs as one area where he believes Michigan has taken steps to protect consumers as data center demand grows.

Other states, Alaimo said, have experienced significant increases in energy rates associated with large data center projects.

He argued Michigan’s requirements could instead create downward pressure on energy rates by ensuring data centers bear appropriate costs associated with their electricity demand.

Andrews said he recognizes concerns about transparency surrounding the incentives and acknowledged that his original legislation was “overly restrictive” regarding what information could be disclosed.

His office is now working on legislation that could expand public access to information about tax breaks provided to data centers while maintaining protections for sensitive business and national security information.

Runestad, meanwhile, argues that the existing incentives go too far and questions whether Michigan needs to subsidize companies that have billions of dollars available for development.

The debate puts two competing priorities against each other: attracting major private investment and ensuring taxpayers can see how much public revenue is being used to support those projects.

Michigan lawmakers will ultimately decide whether the state’s current data center incentives remain in place or are replaced with a different approach.

For now, the dispute reflects a broader question facing Michigan as artificial intelligence and cloud computing drive demand for massive new data centers: how much should the state offer companies to locate here, and how much information should taxpayers receive about those deals?