Why It Matters
Colorado lawmakers voted down legislation that would have offered decades-long tax exemptions to attract data center development, signaling the state’s continued resistance to the energy-intensive industry despite economic competition from neighboring states. The bill’s defeat reflects growing national concern over data centers’ demand on electrical grids and water supplies.
What Happened
The House Energy and Environment Committee voted 11-2 Thursday to indefinitely postpone House Bill 1030, effectively killing the measure. State Rep. Alex Valdez, a Denver Democrat who sponsored the legislation, proposed the postponement himself after determining the bill lacked support to advance through the final weeks of the legislative session.
The bill would have provided 20- to 30-year sales and use tax exemptions to data center operators for computer equipment, software, energy storage systems, and environmental controls. Valdez introduced substantial amendments to add environmental safeguards before proposing the measure be shelved.
The legislation had support from labor groups and the data center industry but faced opposition from environmental organizations backing alternative proposals with stricter requirements.
By the Numbers
Colorado currently has 56 data centers, according to Data Center Map, though industry experts say the state lacks the large-scale facilities operating in neighboring states. The tax exemptions would have run for two to three decades. The committee hearing was rescheduled three times before Thursday’s final vote. The bill was first introduced in January.
Zoom Out
Elected officials nationwide are reconsidering data center incentives amid public backlash over the facilities’ resource consumption and limited job creation. Some lawmakers have lost their seats over support for data center projects. Denver is weighing a development moratorium for the industry, while Larimer County has already implemented one.
The concerns mirror a broader debate over artificial intelligence infrastructure and cloud computing facilities, which require substantial electricity and water to cool server equipment. Utility cost increases tied to data center power demand have fueled opposition in multiple states.
What’s Next
Valdez warned that Colorado’s regulatory approach will push data center investment to Wyoming and other states with fewer restrictions. The bill’s defeat follows a similar proposal lawmakers rejected last year. Environmental groups backing stricter data center regulations may pursue their own legislation in future sessions.