Pay for What You Take
Why I want Utah to treat data centers like the extractive industry they are, and put what they owe into our public schools
Utah has lived by a simple deal for generations. If you take something out of this state, you leave something behind. Oil and gas pay for what they take. So do the copper mines. The land Utah was granted at statehood has been paying for our schools for well over a century.
Data centers take power, water, land, air, and quiet from Utah on an industrial scale. Yet no Utah tax is measured by the water they consume, the land they cover, the pollution they burn on site, or the heat and noise they push onto the families next door. Some of them get their local taxes rebated right back.
For the last six months, I've been building a bill to fix that. The 22nd Century Education Endowment and Data Center Extraction Tax Act charges data centers for what they actually take. It sends part of that money to the neighbors who live with the impact and puts the rest into Utah's public schools, with most of it set aside for good. None of it is a tax on Utah families. This isn't a bill against data centers. It's a bill against a deal where one side takes and everybody else picks up the tab.
That's the short version. The long one, with the why, the how, and the people who helped build it, is below.
The word I almost didn't use
I went back and forth on the word parasite. It's loaded, and I know people who work inside these buildings. They're electricians, engineers, and technicians who are good at what they do and proud of it. They aren't the problem, and I'm not calling them anything.
But the word kept coming back, because it describes the relationship better than anything else I've found. A parasite isn't defined by being evil. It's defined by the math. It draws what it needs from a host, gives back less than it takes, and leaves the host a little weaker every year. Biologists will tell you the same organism can land in very different places on that spectrum: parasite, harmless tenant, or true partner where both sides come out ahead. The organism doesn't decide that on its own. The terms of the relationship do.
Right now, Utah's terms are bad.
In April, the Kem C. Gardner Policy Institute counted 48 data centers operating in Utah, with more than 920 megawatts of capacity and another 2,600 megawatts under construction. About 1,700 of those megawatts will run on their own private power plants, and reporting from Grist and the Salt Lake Tribune shows those plants are mostly natural gas. Then there's Stratos, the project MIDA approved in Box Elder County this spring, planned at up to 9 gigawatts in Hansel Valley. For scale, the entire state uses about 4 gigawatts on an average day.
That's not a few server rooms. It's a new heavy industry, moving in faster than we've written rules for it.
What it sounds like off 9000 South
In West Jordan, Aligned Data Centers runs a 55-acre campus off 9000 South, right up against established neighborhoods. When KSL went out in July, they measured 70 decibels about a block away. One neighbor compared the blowers to about ten lawn mowers running at once. Another talked about what it's done to his property value. The company told KSL its backup generators sit mostly idle and run only for brief tests, grid emergencies, and outages.
One news reading isn't a court case, and I'm not treating it like one. But I've talked with people who live near that campus, and what they describe isn't one loud afternoon. It's a hum that doesn't stop, and a feeling that something enormous moved in next door without anybody asking them. They're not against technology. They know the servers have to go somewhere. What they object to is the deal. They carry the cost, and the benefit goes somewhere else.
Utah already knows how to do this
Here's what gets me. Utah is not new at this.
Oil and gas pay a severance tax of 3 to 5 percent of their value at the wellhead. Metal mines pay 2.6 percent. That's on top of property tax, and it's been that way for generations. We protect the proceeds, too. The Permanent State School Fund, built from trust land revenue, held $3.76 billion by June 2025 and is paying schools a record $134 million this school year. And through the Permanent Community Impact Fund, Utah sends mineral money back to the communities that live next to the extraction.
Now look at how we've treated data centers. Since 2016, large data centers have been exempt from sales tax on their equipment and repair parts, with no job requirement and no sunset. In 2018, Eagle Mountain and Utah County approved an estimated $150 million in tax increment for the first phase of what became Meta's campus. This year the Legislature passed H.B. 507, and it was a real step. It lets counties levy up to 6 percent on the energy the largest data centers use. It also lets local governments rebate up to 80 percent of that right back.
So we ask an oil well for its share. A server campus that uses more power than a city gets a ribbon cutting, and too often a rebate.
Meanwhile, Utah spent $11,347 per K-12 student in fiscal year 2024. That's second-lowest in the country, against a national average of $17,619. The QTS campus going up in Eagle Mountain is a $6 billion, 650-megawatt project that expects about 100 permanent jobs. I'm not knocking those jobs. I'm saying the math has to work for the people who live here, and right now it doesn't.
What the bill measures
The bill doesn't tax data. It doesn't touch your internet, your streaming, or anything you do online. The way a severance tax counts barrels and tons, this bill counts the physical things a data center draws from Utah or pushes onto its neighbors. There are six of them.
Electricity. $11 for every megawatt-hour a data center uses, the same rate Virginia put on its data centers this year. At Utah's average industrial power price, that's about 13 percent on top of the power bill. Grid power and power from a company's own gas plant pay the same rate. Clean power pays half. That means solar, wind, geothermal, hydro, nuclear, and batteries charged from them, as long as it's built on site or built new for the data center and matched to its use hour by hour.
Water. Three tiers, all set at prices Utah already pays. The first is $390 an acre-foot, what the state paid for conserved Colorado River water in 2025. The next is $640, the Jordan Valley Water Conservancy District's wholesale rate to West Jordan. The top tier is $1,254. A facility with closed-loop cooling stays in the bottom tier. One that evaporates water off cooling towers climbs fast. In a state watching the Great Salt Lake shrink, that's the point.
Land. $580 an acre per year, which is West Jordan's industrial stormwater impact fee spread over 20 years. Campuses that sprawl past a reasonable footprint pay double on the excess. Solar fields on site, planted with native ground cover underneath, pay no land charge at all.
Air. This applies only to fuel a data center burns on site to power itself, and only to the two pollutants behind our winter inversions and summer ozone: nitrogen oxides and fine particles. The rates come from the EPA's own estimates of the health damage per ton, and they're higher where we already fail federal ozone standards.
Heat. $2 per megawatt-hour for heat dumped into the air, and nothing for heat sold to a greenhouse, a district heating system, or an industrial user. Germany mandates heat reuse. Utah can just put a price on wasting it.
Noise. This one changed the most, and I'll explain why below. It's measured where people actually live, at homes, schools, and hospitals, not at the fence. Traffic and other background sound get subtracted, so a facility only pays for its own noise. The limits are 55 decibels by day and 45 at night, with a separate limit for the low-frequency hum that comes through walls. A quiet facility pays nothing. A facility that runs 5 decibels over the nighttime limit every night for a year pays about $2.8 million, far more than the walls and enclosures that would fix the problem. That's on purpose.
Every new facility also has to file an acoustic study before it's built. The study identifies the layout that puts the generators and chillers on the side facing away from homes, and the company builds that layout or publishes a certified reason it can't. Anaheim did this when it approved the Disneyland Resort expansion in 1993, with sound walls, setbacks for the loudest venue, monitoring after opening, and fast fixes when it got too loud. It's not a radical idea. It's what you do when a big neighbor moves in.
The whole design comes down to clean up or pay up. A compact, closed-loop, quiet facility on clean power, with a greenhouse buying its heat, pays very little beyond the half rate. A sprawling, evaporative, loud one running its own gas plant pays a lot more. The operators get to choose which one they want to be.
Where the money goes
The neighbors come first. Half of every facility's noise tax goes straight to the households closest to it.
Of everything else, 10 percent stays with the host community, split two ways. Half goes as grants to the host city, or to the county for unincorporated land. That pays for new windows and insulation for nearby homes, air filtration, sound barriers that actually protect homes, parks, trees, and the roads, fire, EMS, and water systems that serve the area. The other half shows up as a credit on the utility bill of every home in the impact zone, which reaches out at least a mile. Renters get it too. It's capped at $2,500 a home per year, and anything over the cap goes to a statewide fund for other communities carrying data center strain. The grants themselves have no per-home cap, so a rural county hosting a giant facility with few neighbors still gets its full share. For Millard County, if the two gas-powered projects under construction near Delta come online, that's roughly $5 million a year.
The other 90 percent goes to K-12 education, in two channels.
The first one fixes buildings now. It starts at 40 percent of the education share and steps down every three years until it hits zero after year fifteen, or sooner if the backlog is cleared. One thing surprised me while writing this. Utah doesn't currently have a statewide measure of how big its school repair backlog is. The bill requires the State Board of Education to finally count it by the end of 2028, verified by an independent engineering firm. The worst buildings in the districts least able to fix them go first.
The second channel is permanent. Everything else goes into the Permanent State School Fund as the 22nd Century Education Endowment, where the Utah Constitution protects the principal. Seventy percent of what it pays out goes to educator pay, and thirty percent goes to arts, humanities, and career and technical education.
Why step the rebuild money down to zero? Because a roof gets fixed once, and a teacher has to get paid every year. Temporary spending has a way of becoming permanent unless the law closes the door, so the law closes the door.
So what does it raise? I'm counting only what's operating or under construction today. Not the hype, and not the multi-gigawatt proposals. That comes to about $91 million to $109 million a year once the tax is fully phased in. If the two Delta gas projects come online, it's roughly double that.
I'll be honest about the endowment: it starts slow. By year ten, it's paying a few hundred dollars per teacher. By year twenty-five, at a reasonable return, it's paying $68 million to $81 million a year, and it keeps growing. If Stratos gets built as filed, the endowment would pass $11 billion by year twenty-five. I'm not counting on that. The base case has to stand on its own, and it does.
Six months, a lot of rooms
This bill didn't come out of one person's head, and it definitely didn't come out of one party.
Over the last six months it's been shaped by conversations with candidates, elected officials, city council members, neighbors living next to the 9000 South campus, and sound and acoustic engineers. Republicans, independents, progressives, and moderates. People who don't agree on much agreed on this: data centers are a problem, and they're also a chance to fund something Utah has never managed to fund properly.
You can see that in how the bill changed.
The noise section changed the most. The neighbors kept pulling the conversation back to where they actually live and sleep, not where the property line is. The engineers kept pushing on how to measure it so it would hold up when a company challenged it. Out of those conversations came monitors at homes instead of the fence, the background subtraction, the margin for measurement error, and a pilot of about 16 months before a single dollar of noise tax gets charged. The design study came from a simpler realization: the cheapest time to fix noise is before anything is built.
An earlier draft priced fuel burned on site by its carbon content. My conservative friends flagged this as a carbon tax, and I could argue all day that it wasn't a carbon tax, but a bill you have to argue about all day doesn't pass. So it came out. What stayed are the charges for the pollutants Utah families actually breathe during an inversion.
I started out splitting the endowment between K-12 and higher education. I ended up putting every dollar into K-12. Public schools are the foundation everything else stands on, and higher ed already has tuition, research grants, and philanthropy. A single fund inside the constitution is also a lot harder to raid.
An early version gave existing facilities five years before they paid anything. That was too generous. Now they pay from the first year, starting at 20 percent of the rate and reaching the full rate in 2032. Projects already under construction, with permits and utility contracts signed before 2027, get a three-year ramp, because they made their plans under today's law and that's fair. Coverage phases in between 5 and 10 megawatts, so nobody has a reason to build at 4.9.
The incentive firewall came from one hard question: what stops a local deal from quietly rebating a state tax right back to the company? Under this bill, nothing can. Existing agreements stand, and cities and counties keep full control of their own energy taxes. But any new incentive that reimburses this tax is void. If value has already changed hands, it comes out of that community's mitigation grants, never out of the families' relief.
There are still questions I can't answer yet, and I'd rather tell you than pretend. Will a per-acre land charge survive Utah's constitutional rules on property taxes? How far can a state go in charging for generator emissions under the federal Clean Air Act? Would a court see the noise schedule as a tax or a penalty? The legal foundation is real. In 1981 the U.S. Supreme Court upheld Montana's coal severance tax at rates up to 30 percent. But strong isn't the same as settled. So the bill asks legislative attorneys to answer those questions first, and every piece is written to stand on its own if another piece gets struck. Every rate is a starting point. The Legislature sets the rates, and only the Legislature can change them.
What this bill is not
It's not a carbon tax. It prices no carbon from any source. Clean power just pays less.
It's not a tax increase on Utah families. It's a tax on an industry drawing down Utah's resources, modeled on the severance tax we've always charged anyone else who does that.
It's not a ban. In September I proposed a two-year pause on new data centers so the state can write zoning, siting, and water rules before more of them go up. That's a separate bill. This one is the other half of the framework, and it applies to every facility already here and every one approved later.
The 22nd century part
The trust lands Utah got at statehood were meant to fund its schools forever, and more than a century later they still do. Every kid in a Utah classroom today is benefiting from people who decided not to spend a windfall all at once.
We have another windfall coming. It just doesn't come out of a mine shaft.
Picture what that endowment pays for in 2075, or 2100. Teachers paid like the professionals they are, with the fund adding to their pay every year it grows. Arts and humanities treated as part of how kids learn to think, not the first thing cut. Career and technical programs that send kids straight into good trades. Buildings that don't leak. And because the clean-power discount pushes the industry toward the solar, geothermal, and next-generation nuclear Utah is already trying to build, we get cleaner air in the valley along the way.
Some of these data centers will be gone before the century turns. What they paid for doesn't have to be.
Bigger than one campaign
This is the part I'm proudest of. The bill has grown beyond me. Several legislators, Republicans and Democrats, have told me they intend to cosponsor it. That's what happens when you build something in the open and let people with different politics tear into it until it's strong enough to stand.
I've spent 15 years on the Hill as an advocate. I was part of the core team that passed Proposition 2. As chairman of the state Veterans Caucus, I spent years building the case for veterans legislation and finding the sponsors to carry it. What I've learned is that a good idea is never enough. It needs people who understand every line of it, in the room when it's heard, especially when the lobbyists show up with amendments that would quietly gut it.
I'd like to be one of those people, from a seat on the House floor.
Election Day is November 3, and your ballot is probably already on your counter. If this is the kind of work you want representing West Jordan, Sandy, and Midvale, I'm asking for your vote. And if you want to help get it across the finish line, there's still time to knock doors and make calls with us at howells4utah.com.
Data centers can be good neighbors in Utah. Good neighbors pay for what they take.
Drew Howells
Candidate for Utah House District 39
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