Pillen ends tax incentives for data center developers building in Nebraska

Gov. Jim Pillen signed an executive order Monday morning that eliminates tax incentives for data center developers.

The order rules out data centers from being eligible for tax incentives under the ImagiNE Nebraska Act. The ImagiNE Nebraska Act is a performance-based incentive program that rewards companies for expanding and hiring in Nebraska.

During a news conference, Pillen touted the benefits of data centers and artificial intelligence. But he argued that any developer seeking to build a center in Nebraska should offer communities benefits like jobs instead of taking from the state through tax programs.

“We just simply believe that we do not need to bring people together by incredible tax incentives,” Pillen said. “We need to make sure that we attract givers, not takers.”

Pillen’s announcement comes on the heels of at least a dozen counties across Nebraska approving moratoriums on data center development. Residents in those county hearings have raised concerns about how much water and electricity data centers will consume in their communities.

Lynne Walz, Pillen’s Democratic opponent in the state’s gubernatorial race, said Nebraskans deserve to know the truth about Pillen’s stance on data centers.

“Less than four months ago, he was lobbying senators to pass these same incentives,” Walz wrote in her statement. “We are tired of politicians saying one thing and doing another."

In addition to barring developers from tax incentives, Pillen’s order asks Nebraska’s Department of Economic Development and Department of Water, Energy, and Environment to collaborate when looking at data center proposals in the state to ensure they fit the state’s needs. It also creates a data center task force under the Department of Water, Energy, and Environment, which will come up with recommendations for the state Legislature so that senators can draft bills that protect the state’s natural resources.

“I think about three things that are extraordinarily high value: our people, our land and our water,” Pillen said. “We have some things that make the state of Nebraska extraordinary that we need to talk about because so many of us just take it for granted.”

Pillen said his executive order fits perfectly with legislation passed this year protecting the state’s public power districts, which he said is one of those extraordinarily valuable things about Nebraska.

LB1261, passed by the legislature during this year’s session, paved the way for private companies to build their own power generating facilities without having to worry that Nebraska’s public power districts might take them over with eminent domain. It applies to facilities that will generate more than 1,000 megawatts. The bill expires at the end of 2031. Combined with LB663, which sets up a strict timeline for county boards to approve permits typically used by data center developers, residents have said that local authorities are being rushed to approve applications. Pillen said those who are concerned need only read his latest executive order.

“We’re trying to help protect the state of Nebraska, to protect our people, protect our (electric) rates, protect our land, protect our water, for crying out loud,” Pillen said.

During debate over LB1261, left-leaning senators in the state’s officially nonpartisan legislature filibustered and attempted to add in both environmental protections, including requiring developers to recycle any water used for cooling, and a ban against data center developers using state tax incentives. Those amendments failed to pass. Senator Mike Jacobson, who presented the order alongside Pillen, said it comes after the heat has been turned up in the dialogue around data centers.

“(LB1261) came at a time of the session when things were moving very rapidly,” Jacobson said. “We’re trying to get to where the truth is and what makes sense. This will be fairly fluid as we move forward.”

The governor's office reports that from January 1, 2021 to June 30, 2026, the state lost $317 million in direct credit revenue to data centers. The value of personal property exempted from taxes is $15 billion, and a two percent tax exemption on property of that value is worth $519 million.

Nebraska has given out nearly $4 billion in incentives to companies broadly, according to an analysis by Good Jobs First. Nebraska is in the top five givers to Facebook and Instagram’s parent company, Meta Platforms Inc., which has received the biggest chunk of subsidies given out from Nebraska at close to $311 million. An online data center tracker lists nine Meta-owned data centers in the state.