In the summer of 2025, upon announcing a $20 billion investment in artificial intelligence infrastructure from tech giant Amazon, Pennsylvania Governor Josh Shapiro declared the commonwealth was “all in on AI.”
The democratic governor said data centers would become “the largest sector investment in the history of Pennsylvania” and lead to hundreds of high-paying jobs and new revenue for local communities.
But, four years earlier, in 2021, Pennsylvania put in motion an incentive to attract data center buildout that would also deprive the state of critical income — a tax exemption program that eliminates the 6% sales tax and use tax on computer equipment purchases by eligible data centers.
The Computer Data Center Equipment Exemption Program started as a tax refund initiative, requiring companies to pay sales tax before requesting reimbursement by the state government. It originally came with a cap of $5 million each year and took effect in 2017 under Gov. Wolf’s administration. Act 25 of 2021 replaced that with a tax exemption program, meaning no sales tax would be paid at all for eligible purchases.
The change made the program “less transparent and less accountable,” said researcher Kasia Tarczynska from the non-profit Good Jobs First. She said, under the previous design, public officials knew more about the actual cost of the program.
To qualify, the state requires operators of data centers to invest millions. In a host county with less than 250,000 residents, a minimum of $75 million in new spending is required, along with 25 jobs created. In more populated counties, that figure goes up to $100 million and 45 jobs. The companies are also required to compensate workers at least $1 million every year.
Right now, according to the Department of Revenue, 16 data center facilities in development or already operating in Pennsylvania hold these active certificates.
In exchange for the data center investment, the state estimated that it would lose nearly $1.9 billion in tax revenue over seven fiscal years starting in 2024-25. That’s according to a February 2026 report by the Department of Revenue. At that time, there were just 12 companies holding the exemption.
The department told the News Lab in an email that the state doesn’t have a direct way of tracking these losses. One thing the department referenced was expenditure reports produced by Ohio’s statement government.
But Tarczynska said a lot of states are underestimating how much revenue they are losing to these programs. In 2025, Ohio’s own data center tax break cost $1.6 billion, which was eleven times more than the original estimate of $136 million, according to the Associated Press.
When data centers come to town
In November 2024, Governor Shapiro introduced and signed an executive order that launched his PA Permit Fast Track program. The initiative, meant to streamline state approvals for development and promised economic growth, featured Project Hazelnut in Luzerne County, a data center site owned by NorthPoint Development. Amazon Web Services was later revealed as the end user. NorthPoint Development’s vice president of development Brian Stahl joined Shapiro for the ceremonial signing of the executive order.
“This really was his baby,” Ginny Marcille-Kerslake, a senior organizer with Food and Water Watch Pennsylvania, said, referring to Shapiro.
Marcille-Kerslake said Shapiro’s initiative sped up state permitting for the developer to bypass local approval. At the 1,300-acre site in Hazle Township, NorthPoint allegedly cut down hundreds of acres of woodland. “That is a real failure of our state government to allow that to happen,” Marcille-Kerslake said.
Ashley Bahrt was born and raised in the Hazleton area, which has quickly become one of the epicenters of data center development in Pennsylvania.
Over the past year, she found herself fighting the construction of Project Hazelnut. Bahrt said she remembered the day she saw the trees cleared. “The visual reality of what was to come,” she said, “It just, like, stopped me in my tracks.”
With Marcille-Kerslake’s help, Bahrt got involved. She attended public meetings at Hazle Township to ask questions about Project Hazelnut. She learned about the state’s open records law and how to file a request.
Eventually, Bahrt found what she believed to be a violation of the local zoning ordinance and brought the issue to Hazle Township’s Board of Supervisors. At that point, Project Hazelnut already received more than a dozen state permits. Amazon, as the operator of the site, had been awarded a tax exemption certificate for the facility. Regardless, the township denied NorthPoint Development a zoning approval, halting the project.
“Community involvement that should have been awarded through public zoning hearings … that was never given to us,” Bahrt said. “Nobody really knew what was going on until it was the final hour.”
NorthPoint sued, and the county court upheld the township’s decision. NorthPoint has appealed that ruling to the Commonwealth Court. The News Lab reached out to both NorthPoint and Hazle Township supervisors, but they did not return comments.
After the county court’s decision, NorthPoint started a campaign to change community perception around the project, Bahat said. It hosted events with the Chamber of Commerce as well as the Rotary Club. It announced a $165 million community benefit offer, which includes funding a brand new local police department for the township, and $10,000 for each eligible household in the township.
The package made national headlines. Some residents called it a bribe. It became a symbol of local level pushback against behemoth tech development.
Bahrt said developers are trying to “bulldoze [their] way in” without actually changing the scale of the project or mitigate environmental impacts.
Meanwhile, on the western side of Pennsylvania, a similar situation is playing out in Upper Burrell Township of Westmoreland County, but the local government approach looks different. Another recipient of Pennsylvania’s Computer Data Center Equipment Exemption Program, TECfusions, is creating conflict between residents and the local governing board.
Despite community pushback, the Upper Burrell Township Board of Supervisors approved TECfusions’ land development plan in August.
That same month, residents Allen Uhler and Guy Fuller, along with the environmental advocacy nonprofit Protect PT, filed a land use appeal against the township. They claim the board had violated its own zoning ordinance — the same claim that prevented the approval of Project Hazelnut 10 months earlier.
Long time Upper Burrell resident and Protect PT executive director Gillian Graber and her team have worked to educate residents about data center development and the township’s role in regulating it.
The reality on the ground is that residents, developers and officials on the local and state levels have different interests that are at odds with one other. This tension is most evident in front of local boards.
“Would you rather be sued by a data center because they didn’t get what they wanted, or by your community because they know what you did is wrong?” Graber said.
Upper Burrell and Hazle Townships entered into 180-day moratoriums on data centers in May and June respectively, allowing the governing boards time to create zoning ordinances that will regulate data centers. On Oct. 22, the Upper Burrell township supervisors voted 3-0 to pass a data center ordinance just two weeks before the community’s moratorium ends on Nov. 2.
Winning and losing in the AI boom
Jobs have been at the heart of promises made by tech developers and elected officials championing the AI boom. For builders across the state, the massive growth of data centers represents an unmistakable boost.
Jim Enders, president of the Central Pennsylvania Building & Construction Trades Council, is seeing that transformation firsthand. Across the 23 counties his union represents, the demand for construction labor driven by data center development has been staggering.
“We are seeing an unprecedented time in history,” Enders said. “With all the building trades, we're busier now than we've been for 50, 60 years.” Enders’ local union, representing plumbers, pipefitters and HVAC technicians, currently has the largest apprenticeship class in its history of 112 years. “That's unheard of for us,” he added.
Big building projects are working overtime right now, and that puts a premium on labor. Enders gave an example of a site in Lancaster, where he said an average journeyman can make between $130,000 and $150,000 a year. For a general foreman in charge, the annual income can get as high as $250,000 a year.
Enders said it’s a great time to be in the trades. “We are the fastest way to the upper middle class, and we're proud of that,” he said.
But Enders acknowledges that each job is time-limited. While the buildout requires a massive workforce, those jobs drop off once the facility is operational.
Proponents of the data center buildout also point to the potential local tax revenue boost, saying the centers could replace empty lots that do not contribute to property tax rolls, one of the most critical income streams for municipalities.
But that promise depends on local rules. For example, in Virginia’s Loudoun County, property tax for data centers is assessed at a value that includes the price of equipment housed inside them. But the assessment office of Luzerne County, where Project Hazelnut is, told the News Lab that they assess data centers simply based on the value of the land, much like a warehouse.
Despite promises made to communities, Chris Borick, a political science professor at Lehigh University, said data centers have not won the broad support of communities because the economic benefits don't outweigh the cost of housing a data center.
Local communities are rightfully concerned about the “immense risks” to health, air quality, and pollution of water, noise, and light brought by hyperscale data centers, said John Quigley, a senior fellow at the Kleinmen Center for Energy Policy at University of Pennsylvania. He is the first and only person in PA history to serve as secretary of Pennsylvania’s Department of Environmental Protection and the Department of Conservation and Natural Resources.
Local governments are often not equipped to regulate these facilities, and he said no state has put in place a comprehensive set of regulatory protections yet.
“The favoring of data centers and the welcoming of data centers was by politicians,” Quigley told the News Lab. “What was missing from that was any involvement or any consultation with communities.”
Marcille-Kerslake, the Food and Water Watch organizer, said the bill that created the tax exemption for data center equipment “was rushed through—so fast—almost under the cover of darkness” in 2021. She said she believed the legislators passed the bill with pressure from construction trades.
The prime sponsor of the tax exemption bill, former Rep. Donna Oberlander, was the majority whip in the State House that year. In 2021, her campaign received $53,000 from building trade unions, according to OpenSecrets. That was the most of any industry contributing to her campaign that year, making up more than one third of its coffers.
Oberlander left office in 2024. The News Lab reached out with questions about whether the campaign contributions from builders influence her legislative action. In response, Oberlander said in a statement that the bill “received overwhelming bipartisan support in both chambers,” and that she remains “supportive of responsible data center development.”
Changing winds, tangled visions
In a few short months, public sentiment turned against data centers, as polls of voters across the commonwealth and the country confirmed. Researchers said that’s why political winds subsequently changed.
In June, Arizona Governor Katie Hobbs approved a budget that included a three-year moratorium on the state’s data center sales tax exemption. A similar pause on tax incentives for data centers went into effect in Illinois in July. That same month, New York Governor Kathy Hochul signed an executive order that established the nation’s first moratorium on new hyperscale data centers.
Since Shapiro’s proclamation in 2025 that AI was the future of Pennsylvania, his position — and policies — have also seen change.
In May, Shapiro introduced Governor’s Responsible Infrastructure Development Standards, or GRID. This set of criteria require data center developers to comply with stricter requirements in order to receive a permit. They are asked to pay the full cost of electricity, openly engage with local communities, hire local workers, and meet the higher standards for environmental protection.
The executive order removed all data center projects from the fast track permitting program and forbade the use of nondisclosure agreements for data center projects. Later, in August, Shapiro would sign another order mandating companies to comply with GRID if they seek to benefit from the computer equipment tax exemption.
In an August interview with CBS Mornings, Shapiro said his new policy was “not about politics” but rather because he “listened candidly.”
“I think it’s important for elected leaders to actually get the vibes of a community, to listen and to be able to be flexible,” Shapiro said.
In a statement to the News Lab, Shapiro’s spokesperson Rosie Lapowsky said, “The Governor is focused on concrete action — which is why his Executive Order makes clear that if data center developers want Commonwealth support, including a tax exemption, they have to meet the strictest requirements in the nation and have the support of the local community.”
Borick, a longtime pollster in Pennsylvania, said a good policy move on data centers can also be a good political move. “You can't untangle [Shapiro’s] desire to win re-election with his decision on this topic — they're too intertwined.”
Borick said the clear preference from voters is to repeal the tax exemption program, something neither the legislature nor the governor accomplished this session. Instead, there was finger pointing.
Democratic Rep. Greg Vitali proposed a bill repealing the tax exemption program in January. The proposal passed through the House but has been stuck at a Senate committee. Vitali put the blame on Senate Majority Floor Leader Joe Pittman and the Senate Republican Caucus, but he added that Shapiro was not blameless, because he said the governor hadn’t done enough to move legislation around data centers during this year’s budget negotiations.
Pittman, in an unrelated public statement, called Shapiro’s shifting position an erasure of his previous record of embracing data centers.
Shapiro’s spokesperson pointed the failure back to the legislature and said that’s what led to him taking the executive action. “We remain open to conversations with the Legislature on this issue,” Lapowsky said in a statement.
The inaction by elected officials didn’t escape Ashley Bahrt’s busy mind as she was fighting for local control in Hazle Township.
“I think people just don't feel comfort in either option, unfortunately,” Bahrt said. She said both Shapiro and his challenger in the race for governor, state Treasurer Stacy Garrity, have both changed their rhetoric around data centers in recent months.
State politics can feel a little too distant to Bahrt right now, and whatever the outcome of Pennsylvania’s November elections, Bahrt has her eyes set on December, when Hazle Township’s moratorium on data center proposals will end. She doesn’t know what happens from here, she said. But, residents are more organized than before, and they are ready, if necessary, to fight for their community again.
This story was produced by the News Lab at Penn State. Reporting by Bronwyn Liber, Jenna Ramm, Piper Murray, Sadie Harvey and Sophia Taberne, Hearst Fellows in the News Lab's Local Reporting Cohort. Map by Bronwyn Liber and Sadie Harvey. This work was made possible by funding from the Arthur P. Miller Newsroom Fund and the Hearst Foundations.