Proposed Mason County data center could get $50 million annual tax break, think tank estimates

A proposed Mason County data center campus for the technology company Meta could avoid paying about $50 million a year in local taxes through a tentative agreement between the county and Meta, according to a new analysis from a progressive think tank. 

In its Friday analysis, the Kentucky Center for Economic Policy estimates the local property tax break offered by the county to Meta would “dramatically reduce” the company’s taxes to the county government and local schools, even when accounting for smaller annual payments Meta would make directly to the county and schools as a substitute for paying the local taxes. 

Jason Bailey, the executive director of the Kentucky Center for Economic Policy, told the Lantern the think tank doesn’t want the “enormous” local tax break offered in Mason County to become “a template for other data center projects across the state.” 

“What Meta is giving or providing in payments to Mason County is a small fraction of what they would pay if they were taxed fully in the way that other businesses and residents of Mason County are,” Bailey said. “That is supposed to be one of the draws or attractions of data centers, but we’re already seeing much of that being evaded away.” 

The think tank, pulling from details provided in the community benefits agreement, estimates the county and local schools would receive about $59 million annually in local property taxes without the bonds. In contrast, the agreement calls for Meta to pay the county about $5 million annually and the local school district about $2 million annually as a substitute for paying the taxes.

Meta, the parent company of Facebook and Instagram, recently settled a multistate lawsuit over whether its products harmed young people; Kentucky will get $358 million in that deal. A Meta spokesperson did not immediately provide a response Friday afternoon to an emailed Lantern request for comment about the analysis. 

Democratic Mason County Judge-Executive Owen McNeill did not immediately respond to emails and text messages sent Friday afternoon requesting a phone interview about the analysis. McNeill, a backer of the project, revealed Meta’s involvement during a fiscal court meeting this month after it had been a secret to the public for over a year. 

The think tank’s analysis primarily focuses on what are known as industrial revenue bonds offered by the county that will exempt the data center campus from paying local property taxes. 

The Lantern reported a tentative community benefits agreement between the county and a subsidiary of Meta states that it will invest billions of dollars into the project’s initial phase but will also receive those bonds from the county that are set to last 40 years.

The detailed local tax breaks also do not account for the state-level sales tax break on data center equipment passed by the GOP-controlled state legislature, which the think tank estimates could give an additional $400 million-plus tax break for the initial phase of the Meta data center. 

Some Republican state lawmakers have hinted at rolling back that sales tax break when lawmakers reconvene next year. That sales tax break would have to be approved by a state economic development board that meets later this month. 

Bailey said their latest analysis is a “rough estimate” that makes “a lot of assumptions”, including how much of the value of taxed property of the data center campus will be the equipment — the computers, for example — and how much value will be the land and buildings on the campus.

But he said the think tank wanted to get an initial understanding of the scale of the local tax break, arguing it deserves as much scrutiny as state-level tax breaks that could benefit data center developers. 

“I think as much attention, if not more, needs to go to the local taxation,” Bailey said.