Texas's data-center tax break outgrew its own forecast by about seventeen times in three years

The forecast history is the most interesting document in this file. In 2023 the comptroller's office put the 2027-2028 cost of the data-center exemption at about $180 million, and by 2025 the same office scored the same biennium above $3 billion ^[8], a miss of roughly seventeen times on a three-year view ^[1]. The $3.2 billion two-year figure now in circulation ^[1] averages $1.6 billion a year, about $300 million above the at-least-$1.3 billion Texas is forgoing this year ^[6], and the comptroller's own note says even that is probably light ^[16].

Then look at what the office expects next. It forecasts nearly $1.8 billion by fiscal 2030, some 38% above the current year ^[5][2]. Set that against the run to here: between $5 million and $30 million a year through 2022, past $150 million in 2023, $1.3 billion now ^[4], which is roughly 43 times the top of that old range in four years ^[3]. The official position, in other words, is that a line which multiplied 43-fold in four years grows 38% over the next four. Sen. Joan Huffman is drafting against whichever of those two numbers reaches the fiscal note ^[2], and the session opens in January ^[3].

Spread this year's cost across the 300-plus operating facilities and you get about $4.3 million each ^[6][4], a crude cut, since the exemption attaches to equipment purchases rather than to the installed base, and the crudeness is worth naming: nobody in this argument has produced the per-project figure that would tell a developer what repeal does to a pro forma. Dan Diorio of the Data Center Coalition argued signal rather than dollars, warning that repeal would send a hostile message and give companies pause about investing in Texas for the long term ^[9]. Critics quoted in the same reporting say the industry comes to Texas for cheap land and electricity as much as for the break ^[10].

Texas leads the country with at least 142 data centers under construction, one ahead of Virginia's 141 on data firm Aterio's count ^[7][7]. A lead that thin means a handful of deferred projects changes the ranking, and that is the industry's real leverage here. It also means the alternative venue has to hold: 37 states offer these exemptions, and Virginia, Illinois, Michigan, Arizona and Georgia are all debating whether to curtail theirs ^[11], so a campus that leaves Austin over a sales tax may land somewhere that repeals its own next spring.

This is probably wrong, but I would price repeal in some trimmed form as more likely than not, for procedural rather than fiscal reasons: Texas shut down the Chapter 313 abatement program last year at a height of more than a billion a year ^[14], and this exemption has already cleared that mark by roughly 30% ^[5]. The local politics run the same direction, with grassroots campaigns in San Marcos, Amarillo, College Station, Waco and Harlingen ^[13] and a Quinnipiac poll finding 65% of Americans oppose a data center in their own community ^[12]. The counter-thesis is respectable: a $1.3 billion break spread across sites that each cost billions is a rounding error in the build math, and repeal changes announcement language and little else. What would settle it is a repeal that passes followed by a construction count that keeps climbing, which would show the exemption was never in the arithmetic, against a scope limit that grandfathers committed projects, which would show the legislature thinks it is.