LANSING – After the Michigan House spent more than nine hours gathering the votes to approve sales and use exemptions for collocated data centers in the state, including Nevada-based Switch, which encouraged the Legislature to implement the exemptions so they can open an east coast hub in the Grand Rapids area, the Senate immediately concurred in the changes sending the legislation to Governor Rick Snyder.

In the House, SB 616 and SB 617 passed 61-45. The Senate concurred 26-12 on both bills.

On the House side, it was a rare vote where party lines dissolved. Thirty-two Republicans and 29 Democrats combined to vote yes while 28 Republicans and 17 Democrats voted no.

Amendments adopted to the bills from Rep. Jim Townsend (D-Royal Oak) and Rep. Winnie Brinks (D-Grand Rapids) would require data centers throughout the state to create 400 jobs by 2022 and 1,000 by 2026. The jobs would have to be net increases. Democrats had insisted on some job creation assurances.

The exemptions from the sales and use taxes sunset in 2035 and the bills hold funding for schools harmless.

Adam Kramer, executive vice president of strategy for Switch, praised the legislative action in a statement.

“We are grateful to Republican and Democratic leadership in the Michigan Legislature, Gov. Rick Snyder and Lt. Gov. Brian Calley, Birgit Klohs and The Right Place in Grand Rapids, the Grand Rapids Area Chamber, the Detroit Regional Chamber and others who worked together to make Michigan’s tax policies competitive and attractive to data centers and our clients around the nation and world,” he said. “We look forward to working in partnership with Michigan to attract the largest companies in the world to the Switch ecosystem here in the Great Lakes State.”

Snyder press secretary, asked if Snyder would sign the bills, said only that the governor would give them a “thorough review.” Snyder has eschewed targeted tax breaks for a specific industry.

Passage capped a legislative rush to pass the bills, introduced about a month ago, and overcame a furious counterattack by some of the more conservative business organizations like the Michigan Chamber of Commerce and the National Federation of Independent Business-Michigan. Supporters had the backing of other business groups like the ones Kramer mentioned.

Concerns about a third bill, SB 618, exempting collocated data centers from the person property tax, led to the dropping of that legislation.

Townsend, the minority vice chair of the House Tax Policy Committee, said he was the only Democrat to oppose the bills when coming out of committee.

“I thought this could be a better bill if we worked harder, and that is what we have done,” he said.

Rep. Earl Poleski (R-Jackson), speaking in opposition to the bills, said tax breaks are only given to companies when the existing tax code is inadequate.

“A special granting of tax breaks to get a business to locate here is something I decried bitterly when running for office six years ago,” he said on the House floor, urging his colleagues to vote no.

But Rep. Robert VerHeulen (R-Walker), who sponsored similar bills in the House, said the legislation would level the playing field in the state compared to 20 others states with similar tax exemptions for data centers.

“We currently have different tax treatments for different industries. …We have a different tax structure for the insurance industry. We have done things to support our agriculture and tourism industries,” he said.” Do we want this industry to grow in Michigan and thereby diversify and make our long-term economic expansion more robust and create jobs and opportunities for all Michiganders? I believe the answer to this question is yes.”

Rep. Andy Schor (D-Lansing), who sponsored one of the House bills, said the bills will help existing data centers grow their businesses as well.

“This important legislation will create good-paying technology jobs in Michigan and help stem the brain drain by ensuring that our talented workers can stay here in Michigan. It also provides excellent opportunities for our high-technology electrical workers, operating engineers, and other skilled trades,” he said in a statement. “Creating a data center will not only bring talent to Michigan, but will motivate our next generation of thinkers to follow their career path right here at home.”

Sen. Patrick Colbeck (R-Canton Township), who was absent the last time the Senate took up the bills, said he was disappointed to see his colleagues approve such a policy.

“I’m all for getting data centers in our state…but providing special tax exemptions for them is not the way to do it. Data centers, one nice thing about them is they have one line item that is a big expense for them and that is around electricity,” he said. “If you can find a way to lower the expense of that electricity, you found a way to go off and provide them with a lower cost of doing business in this state and you can do it without having a picking winners and losers tax strategy.

“That’s the path we should be pursuing to lower the cost of doing business in our state, not by providing a tax exemption,” Colbeck said.

And Sen. Rebekah Warren (D-Ann Arbor), previously a no-vote on the bills, maintained her no-vote in a quote from Sesame Street.

“One of these things is not like the other. One of these things just doesn’t belong. Can you tell me which one of these things is not like the other by the time I finish this song-statement?” she said. “Right now in Michigan, the only for-profit items that are exempt from sales and use tax are food and medicine, and now Internet data centers? One of these things is not like the other.

“I just can’t understand how we’re going to add Internet data centers to that list and say that makes sense,” Warren said.

But others saw the changes made by the House as an improvement and voted in support of the legislation this time around.

“Last time we took this up, I was a no vote because I felt it was too narrow,” Sen. Rick Jones (R-Grand Ledge) said in a statement on the floor. “However, tonight we’re voting on a bill that gives access to this benefit to all data centers, including Liquid Web in my district. I urge a yes vote.”

The following voted no on both the bills: Colbeck, Sen. Judy Emmons (R-Sheridan), Sen. Joe Hune(R-Whitmore Lake), Sen. Tory Rocca (R-Sterling Heights), Sen. Phil Pavlov (R-St. Clair), Sen. Marty Knollenberg (R-Troy), Sen. Steve Bieda (D-Warren), Sen. Vincent Gregory (D-Southfield), SenateMinority Floor Leader Morris Hood III (D-Detroit), Sen. Hoon-Yung Hopgood (D-Taylor), Ms. Warren and Sen. Coleman Young II (D-Detroit).

Senate Minority Leader Jim Ananich (D-Flint), Sen. Curtis Hertel Jr. (D-East Lansing), Sen. Bert Johnson (D-Highland Park) and Mr. Jones switched from voting no on the bills last time to supporting them this time. And Sen. Jim Stamas (R-Midland), absent for the vote the last time the bills were before the chamber, voted yes this time.

ROLL CALL VOTE: Here is how the House voted on SB 616 and SB 617:

REPUBLICANS VOTING NO: Rep. Tom Barrett of Potterville; Rep. Jon Bumstead of Newaygo; Rep. Lee Chatfield of Levering; Rep. Triston Cole of Mancelona; Rep. Laura Cox of Livonia; Rep. Ray Franz of Onekama; Rep. Gary Glenn of Midland; Rep. Ken Goike of Ray Township; Rep. Joseph Graves of Linden; Rep. Martin Howrylak of Troy; Rep. Larry Inman of Williamsburg; Rep. Nancy Jenkins of Clayton; Rep. Joel Johnson of Clare; Rep. Tim Kelly of Saginaw Township; Rep. Dan Lauwers of Brockway; Rep. Tom Leonard III of DeWitt Township; Rep. Ed McBroom of Vulcan; Rep. Michael McCready of Bloomfield Hills; Rep. Aaron Miller of Sturgis; Rep. Peter Pettalia of Presque Isle; Rep. Earl Poleski of Jackson’ Rep. Philip Potvin of Cadillac; Rep. Brett Roberts of Eaton Township; Rep. Jim Runestad of White Lake; Rep. Patrick Somerville of New Boston; Rep. Jim Tedderof Clarkston; Rep. Lana Theis of Bright and Rep. Michael Webber of Rochester Hills.

DEMOCRATS VOTING NO: Rep. Stephanie Chang of Detroit; Rep. George Darany of Dearborn; Rep. Scott Dianda of Calumet; Rep. Pam Faris of Clio; Rep. Erika Geiss of Taylor; Rep. Jon Hoadley of Kalamazoo; Rep. Jeff Irwin of Ann Arbor; Rep. Leslie Love of Detroit; Rep. Derek Miller of Warren;Rep. Sheldon Neeley of Flint; Rep. Kristy Pagan of Canton Township; Rep. Sarah Roberts of Saint Clair Shores; Rep. Rose Mary Robinson of Detroit; Rep. Harvey Santana of Detroit; Rep. Sam Singhof East Lansing; Rep. Robert Wittenberg of Oak Park; and Rep. Henry Yanez of Sterling Heights.

REPUBLICANS VOTING YES: Rep. Chris Afendoulis of Grand Rapids Township; Rep. John Bizon of Battle Creek; Rep. Mike Callton of Nashville; Rep. Ed Canfield of Sebewaing; House Speaker Kevin Cotter of Mount Pleasant; Rep. Kathy Crawford of Novi; Rep. Jeff Farrington of Utica; Rep. Anthony Forlini of Harrison Township; Rep. Daniela Garcia of Holland; Rep. Ben Glardon of Owosso; Rep. Kurt Heise of Plymouth Township; Rep. Thomas Hooker of Byron Center; Holly Hughes of White River Township; Rep. Brandt Iden of Oshtemo Township; Rep. Bradford Jacobsen of Oxford; Rep. Klint Kesto of Commerce Township; Rep. Andrea LaFontaine of Columbus; Rep. Eric Leutheuser of Hillsdale; Rep. Peter Lucido of Shelby Township; Rep. Lisa Posthumus Lyons of Alto; Rep. David Maturen of Vicksburg; Rep. Aric Nesbitt of Lawton; Rep. Rick Outman of Six Lakes; Rep. Dave Pagelof Berrien Springs; Rep. Amanda Price of Park Township; Rep. Al Pscholka of Stevensville; Rep. Bruce Rendon of Lake City; Rep. Jason Sheppard of Temperance; Rep. Henry Vaupel of Handy Township; Rep. Robert VerHeulen of Walker; Rep. Roger Victory of Georgetown Township; and Rep. Ken Yonker of Gaines Township.

DEMOCRATS VOTING YES: Rep. Brian Banks of Detroit; Rep. Winnie Brinks of Grand Rapids; Rep. Charles Brunner of Bay City; Rep. Wendell Byrd of Detroit; Rep. John Chirkun of Roseville; Rep. Paul Clemente of Lincoln Park; Rep. Tom Cochran of Mason; Rep. Gretchen Driskell of Saline; Rep. Fred Durhal III of Detroit; Rep. LaTonya Garrett of Detroit; Rep. Sherry Gay-Dagnogo of Detroit; Rep. Christine Greig of Farmington Hills; House Minority Leader Tim Greimel of Auburn Hills; Rep. Vanessa Guerra of Bridgeport; Rep. Marcia Hovey-Wright of Muskegon; Rep. John Kivela of Marquette; Rep. Robert Kosowski of Westland; Rep. Marilyn Lane of Fraser; Rep. Bill LaVoy of Monroe; Rep. Frank Liberati of Allen Park; Rep. Jeremy Moss of Southfield; Rep. Phil Phelps of Flushing; Rep. Julie Plawecki of Dearborn Heights; Rep. David Rutledge of Ypsilanti; Rep. Andy Schor of Lansing; Rep. Charles Smiley of Grand Blanc; Rep. Alberta Tinsley-Talabi of Detroit; Rep. Jim Townsend of Royal Oak; and Rep. Adam Zemke of Ann Arbor.

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