Amazon has put its plans for a large-scale data center in Becker, Minnesota, on hold after state legislators suggested reducing corporate tax incentives for these types of projects. The decision casts uncertainty on the future of the project and its potential economic benefits for the region.

The project was viewed as a potential replacement for some of the tax revenue that will be lost when the Sherco coal-fired power plant closes in 2030. The data center project, estimated to cost billions of dollars, was expected to create numerous construction jobs. This is not the first time a major tech company has backed away from a project at the Sherco site; in 2022, Google cancelled a $600 million plan.

Last week, state leaders in St.Paul moved to eliminate a sales tax exemption on electricity for data centers. This tax break has saved data centers approximately $100 million annually across the state, and that figure was projected to increase as more centers become operational. Some Democratic lawmakers argue that profitable companies like Amazon do not require these tax breaks, characterizing them as a form of corporate welfare. The exemption remains in place for computers,cooling equipment,servers,and software.

Political Reactions

Minnesota Republican Senator Andrew Mathews, who represents the Becker area, expressed his disappointment in a statement: “I’m incredibly frustrated that a major economic lifeline for the Becker community has effectively stalled.” He added, “Earlier this session, Governor Walz rolled out the red carpet for Amazon and pledged to support their investment in Minnesota. But when it came time to act, the governor and legislative Democrats repeatedly stonewalled the project.”

“I’m incredibly frustrated that a major economic lifeline for the Becker community has effectively stalled.”

Senator Mathews also stated, “I’ve fought all session to pass policies that give regulatory certainty and stability to help these projects come here, but the governor’s proposal last week to repeal the data center’s sales tax exemption on electricity appears to be the final straw.As for Becker, I remain committed to making progress and growth easier.”

Amazon’s Stance

Amazon has not completely abandoned the project. The company indicated in a statement that it intends to retain the 348 acres of land it purchased in Becker for $73.5 million in 2024, suggesting a possible reconsideration of the data center plans in the future.