Language in a bipartisan House bill to lure data center firms to Maryland with tax incentives has found its way into a bill that creates new taxes on services like dog walking, boat repair and tanning.
House Majority Leader Eric Luedtke took verbatim language from the data center bill, HB1339, sponsored by Del. Jay Jacobs, R-Kent, and amended it to the tax proposal that would raise state revenues by $70 million annually.
The proposal, with Luedtke’s amendment, cleared the House on Tuesday for a final vote–but Luedtke, D-Montgomery, special ordered the measure until Wednesday in order to find support in the Senate.
An identical data center bill cross-filed by Sen. Minority Whip Steve Hershey unanimously cleared the Senate Budget and Tax Committee on Tuesday with only a friendly amendment. Hershey’s bill has also garnered bipartisan support.
“I understand the House is playing games with the cross-filed bill,” Hershey, R-Queen Anne’s, said in an email to the Kent Pilot. “But I’m pleased the Senate Budget and Tax Committee passed our bill unanimously with a simple friendly amendment. These types of bills should move on their own merits; the irony is that the tax exemptions in the data center bill have a dynamic model that shows our counties will bring in more tax revenue from construction and development, and ancillary businesses that feed off data centers.”
“This is the way we should be raising tax revenue in Maryland, by incentivizing businesses to locate here, employ here and grow here,” he continued. “Increasing taxes on our citizens is not the way to go when we have so many economic development opportunities.”
The bill must pass the Senate and move to the House by Monday, March 16, which is crossover day.
Crossover day is the deadline each chamber has to move bills to the other chamber in order to get a vote during the 90-day session.
The data center bill was requested from the Kent County Commissioners based on recommendations from the Kent County Economic Development Office. The county believes the state is losing out on a revenue windfall from similar incentives that have proved successful in Loudon County, Va., where tax revenue from data centers alone soared from $50 million in 2012 to $350 million in 2020.
Kent leaders believe data center firms would greatly benefit from the county’s recent $7 million investment in a new 150-mile fiber-optic network.
“The need for data storage and processing increases daily,” said Kent Economic Development Director Jamie Williams at the bill’s Senate hearing on Feb. 12. “It’s not a matter of if these data centers will be built, it is a matter of where.”
Other services targeted for new taxes are fur cleaning and storage, country club memberships, marina and boat repair, art moving or storage, interior design and decorating, and air transportation, telemarketing, lobbying and travel services.