Johnson Announces “Data Centers Done Right” Initiative

Johnson Announces “Data Centers Done Right” Initiative
Sioux Falls, S.D. – Today, U.S. Representative Dusty Johnson (R-S.D.) announced the “Data Centers Done Right” initiative.
“President Trump has called for an ‘era of American AI dominance.’ We cannot allow China or others to dominate artificial intelligence, and there is a role for South Dakota in that race,” said Johnson. “As Governor, I will ensure that data centers constructed in South Dakota make our state stronger. South Dakota can reduce property taxes and be a national leader in the AI revolution, but only if we have vision, drive, and a plan. With the ‘Data Centers Done Right’ initiative, we can make sure our state is home to data centers that make our electrical grid, water supply, quality of life, and economy stronger. Only projects that contribute more than they take will be eligible.”
Currently, South Dakota is not a competitive location for data centers because the state’s taxes on data centers are significantly higher than in other states. In fact, South Dakota is one of only two states in the region that charge taxes on electronic equipment. State law currently allows an optional rebate of those taxes, but the lack of certainty on that tax treatment has driven projects elsewhere.
Johnson’s “Data Centers Done Right” initiative will convert the current permissive tax rebate on electronic equipment to a standard rebate or exemption for eligible projects which meet certain requirements. Key requirements include:
- Power Use Protections—Before projects can be deemed eligible, it must be determined that the project “will not impose an undue burden on existing electric users” in South Dakota.
- Water Use Protections—Before projects can be deemed eligible, it must be determined that the project “will not impose an undue burden on water quality or existing water users” in South Dakota.
- Tax Benefits—Before projects can be deemed eligible, it must be determined that even after the rebate is granted, the project “would pay substantial property taxes to county, school, and other local governments,” and “would pay substantial sales taxes to state government” over the course of the next five years.
- Job Benefits—Before projects can be deemed eligible, it must be determined that the project “will create jobs with an average total compensation greater than the average total compensation of hourly workers in that area.”
Once implemented, the “Data Centers Done Right” initiative could result in the construction of AI factories that collectively pay more than $200 million in property taxes to state and local governments over the next 10 years. Data centers are a critical component of AI dominance, and when sited correctly, they provide tremendous benefit to local communities. For example, an AI data center proposed for Deuel County would pay an estimated $5 million in property taxes annually. The current annual budget for Deuel County is $11 million, and the budget for the Deubrook School District is $3.4 million.
Over the next few months, Johnson will work with South Dakotans, including state legislators like Representative Kent Roe, to develop additional details and legislative language needed to make “Data Centers Done Right” a reality.
To learn more about “Data Centers Done Right,” please click here.
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