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Trenton lawmakers take aim at data centers

Measure would reduce program;s tax credits

By: Katie Sobko
NorthJersey.com
USA Today Network - New Jersey

..... As more New Jersey residents and municipalities push back on allowing artificial intelligence data centers to be developed in their communities, the state Senate Budget and Appropriations Committee has advanced a bill that would reduce the tax credits available for the Next New Jersey Program and reallocate them for certain energy-related purposes.
..... Known as the "end Datha Center Tax Credits Act," bill would cut tax credits by $250 million and authorize the Board of Public Utilities, or BPU to award tax credits to developers of energy storage projects under existing programs and establish a one=time gross income tax credit to lower-income taxpayers who are residential electric customers.
..... The bill unanimously cleared the committee.
..... Jack Ramirez, a research analyst at the New Jersey Business & Industry Association, was opposed to the bill because of the impact the reduction in tax credits could have on the technology industry as a whole.
..... "I wanted to highlight the importance of this tax credit. It's not just data centers. it is entire industry that we are really stunning the growth of her, and it's important that we prioritize it," Ramirez said.
..... Peter Chen, a senior policy analyst for New Jersey Policy Perspective, spoke in support of the bill, noting that the tax credit was only to beneficent large data centers.
..... Up to $125 million would be available for those energy storage tax credits, and the one-time tax credit for taxpayers with an income of up to $55,000 who are residential electric customers would be for $00.
..... The next New Jersey Program currently has $500 million available for rejectors related to the development of artificial intelligence or data centers. The money already awarded, $250 million in tax cerises to one project, would not be affected by this legislation.

Sherrill seeks to regulate AI, data centers in New Jersey

..... Governor Mikie Sherrill has taken steps to regulate data centers in an effort to make the facilities pay for the energy they sue and contribute to the communities they join.
..... The governor last month [05/2026] outlined a four-part plan that includes making data centers "pay their fair share by brining their own energy to the table, operate transparently, add value to the grid and our communities, and support good-paying jobs long-term."
..... "for years, smaller data centers have been scattered in office parks around the state," Sherrill said when unveiling the initiative. "Today's data centers sometimes use 300 megawatts, enough to power entire towns. That skyrocketing demand is outpacing supply and jacking up all of our electric bills."

Data centers have polarized New Jersey as electricity rates rise

..... Data centers have been a hot-button issue in New Jersey and around the country in recent months, as towns and cities protest to stop the construction of facilities in their neighborhoods.
..... A report issued by New Jersey Policy Perspective earlier this year [2026] contends that the "facilities sue large amounts of energy, do not deliver meaningful long-term benefits and cause the state to lose money from subsidies and credits."
..... Chen and new Jersey Policy Perspective colleague Alex Ambrose said the state should be proactive to address "hidden risks," as a benefit to small businesses and residents throughout the state.
..... Projections indicate that nearly 10% of the state's electricity usage will be by data centers in the next four years.
..... New Jersey is one of 13 states on the electricity grid operated by PJM Interconnection. It is responsible for energy for a huge swath of the mid-Atlantic and Midwest regions, stretching from New Jersey to North Carolina and from coast into Illinois, covering about 70 million residents within its service area.
..... Some New Jersey towns have sought to stop construction of data centers. Andover had a resounding turnout against plans to approve one at a recent township Committee meeting, and Millville unanimously approved an ordinance banning data centers.
..... It's not just New Jersey pushing back, either. Last year, [2025] the municipal council in Tuscon, Arizona, voted against allowing an Amazon data center to be connected to the city's water system. The project had drawn an outcry from residents because of the energy and water it would need to operate.
..... An investigation by Bloomberg News found that about two-thirds of new data centers built or in development since 2022 are in places already gripped by high levels of water stress.

..... Katie Sobko covers the New Jersey Statehouse. Email: sobko@northjersey.com

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