08/27/2026
Happy Thursday! I’m going to do something different today! I get to be a speaker in front of a big audience in September that is talking about Data Centers!
We hear about 2-3 data centers in our local news daily. I would like to hear everyone’s thoughts if they are for or against?
Here is my editorial and take.
Editorial: Data Centers — Economic Engine or Expensive Promise?
Data centers are being sold to cities as the infrastructure of the future: billions of dollars in private investment, new technology, construction jobs, higher property values and a larger tax base. And there are real economic benefits. A 2024 industry analysis estimates that Missouri’s data-center industry contributed about $13.3 billion to Missouri GDP, $7.6 billion in labor income and $1.057 billion in state and local tax contributions. But that figure includes direct, indirect and induced economic activity—not simply checks written by data-center operators to cities.
That’s where the story gets complicated.
The money coming into cities
There are examples where the projected revenue is substantial.
In St. Louis, the city’s approved data-center project is projected to generate $27.4 million in first-year city tax revenue and $33.4 million for St. Louis Public Schools, with a projected $432.3 million over ten years. Importantly, the city says this particular project will not receive local tax-abatement incentives.
Montgomery County has also projected hundreds of millions of dollars in new property-tax revenue over 25 years from Amazon’s $10 billion data-center investment. Amazon says it will pay 100% of the costs associated with connecting the facility to the electric grid.
So the argument that data centers never produce revenue isn’t supported by the evidence.
But neither is the argument that billions in investment automatically means billions in new public revenue.
The other side of the balance sheet
Missouri offers eligible new data centers a 100% state and local sales/use-tax exemption on qualifying purchases, potentially for as long as 15 years.
And local governments can add property-tax incentives.
For example, the Liberty, Missouri, Metrobloks project involves more than $202 million in estimated property-tax abatements, according to reporting on the approved deal.
That raises the question cities should be asking:
How much new revenue does the data center actually generate after incentives, infrastructure costs and public obligations are deducted?
That’s a much more meaningful number than the headline “$1 billion project.”
There are also infrastructure concerns. Data centers can require enormous amounts of electricity and water. Missouri’s own Department of Natural Resources says data-center growth is expected to be the main driver of future energy-demand growth in Missouri, while the state is still working to determine the magnitude of that demand.
The U.S. Department of Energy similarly warns that large-load customers such as data centers create questions about who pays for grid investments, stranded infrastructure and resource adequacy.
And jobs deserve scrutiny. A data center may involve thousands of construction jobs, but the permanent workforce can be relatively small compared with a similarly valued manufacturing facility. Missouri PSC industry-analysis director James Busch has specifically cautioned that data centers are not comparable to large manufacturing plants that employ thousands of workers, and that Missouri’s tax provisions can reduce the revenue generated by some facilities.
So, are data centers really beneficial to cities?
My take: They can be—but only if the deal is structured correctly.
I don’t think the question should be “Are data centers good or bad?”
The better question is:
What does the community actually receive after every benefit and every cost is counted?
A city should calculate:
Tax revenue
− tax abatements
− utility/infrastructure costs
− water-system impacts
− public-safety costs
− road/infrastructure costs
− environmental costs
= actual net community benefit
If a $10 billion data center produces $400 million in genuine public revenue while paying its proportional share of electricity, water and infrastructure, that’s potentially a very good economic-development deal.
But if a city gives away hundreds of millions in taxes, builds infrastructure for the developer, takes on enormous electricity and water demands, and ends up with a relatively small permanent workforce, then the $10 billion investment number can be misleading.
My bottom line
I am neither automatically for nor against data centers. I’m against cities accepting the sales pitch without seeing the complete balance sheet.
The biggest red flag isn’t a data center itself. It’s secrecy around the economics.
Before approving one, I would want the public to see the actual:
* purchase price and investment;
* projected annual tax payments;
* every tax exemption and abatement;
* electricity demand;
* who pays for transmission/substations;
* water consumption;
* permanent jobs and wages;
* construction jobs;
* expected lifespan;
* decommissioning obligations; and
* net revenue to the city, county and schools after incentives and costs.
If the numbers still work after all of that, build it.
If the numbers only work because taxpayers and ratepayers are absorbing the costs while the developer receives the benefits, the city should walk away.
And that, in my view, is the real debate over data centers—not whether they look impressive from an aerial photograph, but who ultimately pays and who ultimately profits?
