This past week was dominated by discussions about data centers. Many are lining up to oppose them, and some are calling for a total ban on building any new data centers. Fortunately, these decisions will be made locally by planning commissions and county boards. However, I feel that I can share some facts that will help answer some of the questions that people are asking.

I want to revisit local property taxes and how to reduce them. If your property value is rising, your neighbors’ values likely are as well. State law requires all classes of real estate to be assessed consistently. Together, these individual values make up the property tax base for each taxing authority. For example, Lincoln County’s total property tax base is $6,634,736,498. Last year, total levies for all of the taxing authorities were $96,292,575, resulting in an average levy rate of 1.4513. If the tax base were larger, the levy rate would be lower.

Your individual property tax can be reduced if the tax assessment from the county is reduced, or if the tax value base is increased.

If a $1.5 billion data center were added to the tax base, the base would increase, causing the levy rate to fall if the budget remains the same. That would result in a reduction in your individual property tax bill. The data center would also bring sales tax revenue for building materials, equipment, and other products. If it were within city limits, that sales tax would include the collection of the local option sales tax. Keep in mind that electricity is subject to sales tax, so if a large electricity user (like a data center), there is significant sales tax paid to the state and, if within city limits, to the municipality.

Sales tax also impacts your property taxes. For example, North Platte has a local sales tax. With the growth of retail stores such as Menards, Hobby Lobby, and mall stores, the city has experienced significant growth in local option sales tax, which has allowed it to reduce the portion of its budget funded by property taxes and, in turn, lower its property tax levy rate.

Kearney is another example. Within Kearney’s city limits is a sizable cryptocurrency miner. A cryptocurrency miner uses computers to solve mathematical equations to earn cryptocurrency (typically Bitcoin). The cryptocurrency mine in Kearney uses as much power as the entire city does when operating at full capacity. The city collects millions in sales taxes, which have significantly reduced its property tax bill.

Understanding the economic benefit, we are right to evaluate any proposed project within the context of the local community. Not every project will be the right fit for every place. There is a wide range of potential impacts from a data center or crypto mining operation, from noise to power needs to water usage. Some projects use huge amounts of water and create a lot of waste. Others are air-cooled or use less water within a closed-loop system. Some are quieter than others, and some may come with a significant energy generation investment that could increase the capacity for more houses or industries in the region.

In the end, any large development will require approvals from many entities at both the state and local levels. Impacts on water quality and quantity are overseen by the local natural resources district and the Nebraska Department of Water, Energy, and Environment. The Power Review Board – and likely the local public power district – will also be involved. Not to mention the zoning and conditional use approvals from the planning commission and county board. All of the pieces have to fall into place for a project to move forward.

I have confidence in our local officials to make good decisions based on the best information available to them. That includes input from the public. But I encourage you to learn the facts about proposed projects, rather than just opposing because they fall into a specific category. There are usually pros and cons, and often steps that can be taken to mitigate any negative impacts. Our local elected officials have a responsibility to balance the rights of various property owners and must also consider economic benefits.

It is a privilege to represent you in the Nebraska Legislature, and I look forward to hearing from you regarding issues that are important to you. I can be reached at 402-471-2729 or by emailing me at mjacobson@leg.ne.gov.