School tax, power costs now required for data centeR incentive

Sep 18

Written By Nevada Political Journal Staff

Gov. Joe Lombardo issued a new executive order, the Nevada Standard for Responsible Data Center Development. It changes who gets a data center tax break. Companies that want the incentive must pay the school sales tax in full, give up the sales-and-use tax break, and cover their own water and power costs so those bills are not passed to households. Projects owned or controlled by a U.S.-designated foreign adversary cannot apply for the tax break.

Lombardo said the order “sets clear expectations while opening the door to billions in responsible investment, good-paying jobs, and long-term economic growth for Nevadans.”

Nevada has hosted the industry for years, including Switch campuses in Las Vegas and at the Tahoe-Reno Industrial Center. A 2015 law created the tax break. A 2023 analysis put employment at about 4,550 jobs and state and local tax revenue at $290 million.

Public resistance has grown. Reno barred new applications through August 2027. Nye County banned them in the Pahrump basin. Henderson is reviewing projects case by case. Boulder City voters will decide the issue in November. The Clark County Education Association says the industry should stay, but more of the tax proceeds should go to classrooms.

Power bills are part of the argument. USAFacts found data centers are probably not the main reason most Americans’ electric bills have risen so far. After inflation, residential rates were up about 7% from 2021 to 2025. Some local studies still show higher bills near new centers.

The 2015 law required the state to grant abatements to projects that met job, wage, and investment thresholds. It included no water or power conditions. In 2025, lawmakers gave the Governor’s Office of Economic Development board authority to deny an application, shrink the break, or attach conditions. Lombardo’s order uses that authority. It does not repeal the statute.

The Data Center Coalition thanked Lombardo for engaging on the issue. It said some parts of the order create extra hurdles to building in Nevada, but that it shares his goals on jobs, natural resources, and public education. The group said it will keep working with the governor and lawmakers.

Then-State Sen. Aaron Ford sponsored the 2015 law that created Nevada’s data center tax break. Now, as the Democratic nominee for governor, he called for a pause on the same program he helped create. Lombardo has said he supports projects that use closed-loop cooling, do not raise utility rates, and help fund rural communities and public education.

The next fight is the 2027 Legislature