Republican leaders in the North Carolina General Assembly are joining Democratic Governor Josh Stein in calls to repeal all, or at least part, of the state's long-standing sales and use tax exemptions for data centers.
"You've got to have them to a degree," Hall said of data centers during a Thursday gaggle with reporters.
He continued, "I think some of those policies, though, were implemented when maybe the state was trying to lure more and more of those for economic development purposes. Now, they've sort of proliferated everywhere. So I don't know that there needs to be an incentive to get more of them here."
North Carolina's sales tax exemptions for data centers were originally passed in 2006 and updated in both 2010 and 2015. As Hall and also Stein have pointed out, they date back to an era when North Carolina was trying to lure business from a still-nascent industry.
Now, that industry's footprint in North Carolina is highlighted by some of the largest companies in the world. Amazon, Apple, Google and Microsoft have each announced or already built data centers worth at least $1 billion. Meta has invested at least $750 million into a Forest City data center and also embarked on a partnership worth up to $6 billion with Corning to manufacture the fiber it needs for its data centers.
"Big companies like that, they ought to pay the same tax as any other business that's beside of them and make it fair. And so whatever we need to do that, I'm fine with," Hall said in response to a question from the N.C. Newsroom.
Bipartisan legislation introduced in the N.C. House last month would repeal the data center tax exemption. The bill, which was referred to the House Finance Committee, is only eight lines long and narrow in its focus.
House Bill 1213's primary sponsors include Rep. Donnie Loftis, R-Gaston; Rep. Bill Ward, R-Pasquotank; and Rep. Pricey Harrison, D-Guilford.
How NC's exemptions work
Under North Carolina state law, data centers that meet eligibility requirements do not have to pay sales tax on their construction materials, their cooling equipment, any hardware, any software or the electricity they use to power their equipment.
Since the incentives were updated in 2015, the Department of Commerce has deemed 37 data centers are eligible to receive the tax breaks.
To be eligible, a data center must invest at least $75 million into its facility over a five-year period, be offering wages above the average of the county where it is located and be offering health insurance to its employees.
Earlier this year, Stein directed the N.C. Department of Commerce to estimate the sales tax revenue that data centers could be paying. Using publicly available data, Commerce analysts found that North Carolina is not receiving between $45 and $57 million in sales tax payments.
The analysis also determined that could jump as high as $450 million a year if all of the data center projects planned for North Carolina are built. And in the process of construction, those data centers would pay between $1.5 and $2.3 billion in sales taxes without exemptions in place.
Representatives of the Data Center Coalition, an industry trade group, previously told the N.C. Newsroom that North Carolina's sales tax incentives are a key part of why the state is attractive to data center developers.
Dan Diorio, the vice president of state policy for the Coalition, said data center operators need to swap out servers and other hardware on a regular, rolling basis. With a sales tax incentive in place, he said, developers are more likely to replace that equipment more quickly, meaning their users can more easily take advantage of significant advances in computing power.
"By having a sales tax exemption program on the books, you're fostering the continuous reinvestment into the facility itself," Diorio said in that early April interview.
Berger eyeing repeal, too
Senate leader Phil Berger, R-Rockingham, previously expressed skepticism about whether data center developers still need the incentives.
Berger was also clear that he believes data center development is, all in all, a positive for North Carolina.
This week, Berger was more specific in what he thinks needs to happen with the exemptions, pointing specifically to the part where data centers don't pay taxes on the electricity they use.
Berger said, "The sales tax on electricity at data centers probably ought to be paid by the data centers. I mean, you've got to pay sales tax on your bill. They should pay sales tax on their bill."
Caldwell County, where Hall lives, is the site of a $1.2-billion data center in Lenoir, as well as a Centrilogic data center.
"Put simply, we have what data centers need in Caldwell County," the county's economic development department proclaims on its website, pointing to relatively mild summers, access to fiber infrastructure and availability of relatively low-cost electricity.
Thursday, Hall expressed concerns that modern data centers are using large amounts of electricity and water while they are also often receiving incentives or tax abatements from local governments.
"If you give these incentives and you get more and more of something that maybe we're getting too much of, it's probably time to back up on those incentives," Hall said.
