Critics: Data center tax credit could mandate unionization, drive jobs out of state

(The Center Square) – Lawmakers are in the process of changing a recent tax credit program for the development of data centers, but some worry the proposed change hijacks the successful program to favor union interests and could drive jobs out of state.

The Data Center Tax Credit Act was enacted with bipartisan support two years ago. The credit has been touted by the governor, Democrats and Republicans alike for attracting billions of dollars of private investment in the state and thousands of construction jobs and hundreds of permanent jobs.

The credit is not one of the nine the governor has labeled “corporate loopholes” he’s wanting to limit to increase revenue for the state by nearly $1 billion.

Senate Bill 2182 passed the Senate unanimously earlier this month and provided some cleanup language to the tax credit act.

The House amendment that passed 65-42 with one voting present clarifies what is considered a data center, including opening it to facilities that operate within five miles from each other, and requires green building certificates for the entities seeking the credit, among other changes.

But another provision was recognized as controversial by amendment sponsor state Rep. Mark Walker, D-Arlington Heights. He said the proposed change requires entities seeking a credit or seeking renewal of a credit to have a “labor peace agreement” he said would have the employer agreeing to not hinder any attempts for workers to unionize.

“It is not a unionization mandate, but it could lead to that through a fair and open, normal election process,” Walker said. “Employees might well vote to be part of a union …”

But Republicans criticized Walker’s amendment to the Senate bill as changing rules on data centers looking to develop in Illinois mid-stream.

“The [tax credit] applications will have been built under one set of rules and in the meantime during a processing period the rules would have completely changed,” state Rep. Tom Demmer, R-Dixon, said. “If you’re an applicant you may reconsider an application.”

Downstate state Rep. Charlie Meier, R-Okawville, said he sees what’s going on in the St. Louis region.

“That state of Missouri and St. Louis area is going after the data centers that we’re competing for right now,” Meier said. “They’re coming up with a bill just like ours but without this amendment and these jobs and this income is going to be in Missouri. Our state’s workers will have to drive to Missouri again to get a job.”

Supporters of the amendment said it’s not a surprise that Illinois is a pro-union state “that wants to use union workers.”

“That is not an earth shattering revelation to anyone, nor should it be,” state Rep. Mike Zalewski, D-Riverside, said. “We’re a pro-union state that wants people benefiting from our tax code to use union labor.”

The measure was amended in the House Saturday and heads back to the Senate for concurrence. The scheduled end of session is May 31.

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