Michigan Representative Introduces Bills to Close Data Center Tax Loophole for Colleges

Michigan House Democrat Targets Tax Breaks for Universities Building Data Centers

LANSING — State Representative Reggie Miller is introducing legislation that would prevent colleges and universities from claiming property tax abatements when they build or partner on data center facilities.

The bills were announced Thursday by House Democrats ahead of the state House's return next week.

Miller's proposal would close what he describes as loopholes that allow educational institutions to access local property tax breaks meant for education facilities or economic development.

"One would close loopholes for colleges and universities for building or partnering on data centers. It would prevent access to local property tax abatements meant for education facilities or economic development," said Miller during a news briefing.

Miller's Chief of Staff, Jackson Pahle, explained the rationale behind the legislation.

"Colleges are still able to build them. This is not a moratorium or a ban or anything, but it's just so that colleges and these data centers aren't double dipping on tax incentives," Pahle said.

The legislation would ensure that data centers remain on the tax rolls if their primary function is data storage and processing rather than education.

Second Bill Would Require Registration and Environmental Disclosure

The second bill introduced by Miller would mandate that data centers register with the state and disclose operational impacts including energy and water consumption.

The registration requirement would also require facilities to reveal financial safeguards for potential environmental risks and decommissioning costs.

This follows growing scrutiny of data centers across Michigan, which now hosts more than 70 facilities according to state officials.

Data Centers Spark Controversy Across Michigan

Michigan approved a 1.3 gigawatt battery storage portfolio in early April that includes assets supporting Oracle's data center development. The approved storage includes 332 megawatts spread across three projects.

The controversy over data centers intensified earlier this year when Attorney General Dana Nessel requested that the Michigan Public Service Commission reassess supply deals for the Stargate data center project south of Ann Arbor.

The commission ultimately rejected Nessel's request to reopen DTE Energy's supply arrangement for the Oracle and OpenAI facility.

"These proposals come with the promise of jobs, but taxpayers are skeptical. They want to know if the electric grid can handle the energy demand data centers create, and how much air, water, and noise pollution they will produce," according to WDET reporting on the issue.

Michigan lawmakers voted to provide tax breaks for large data centers in late 2024, which has led to more than 15 proposals across the state since then.

Miller's Bills Target Specific Loopholes

The tax loophole Miller targets allows educational institutions to claim property tax exemptions typically reserved for schools and universities. Without this change, local governments could lose revenue when colleges build data centers on their property.

Miller's legislation would require facilities to demonstrate that their primary purpose is data storage and processing, not education. This would prevent educational institutions from using tax incentives meant for the education sector.

The second bill addresses environmental concerns by requiring data centers to register with the state and report their energy and water usage. This would give local governments and residents greater transparency into the environmental impact of these facilities.

Data Centers Bring Both Promise and Concerns

The data center boom in Michigan has brought economic development opportunities alongside environmental and infrastructure concerns. Oracle's data center in Saline and the planned facility in Allen Park are among the most prominent projects.

Local officials have delayed votes on several proposals, requesting additional information from developers about their plans and commitments.

The Michigan House is set to consider these and other data center-related bills when it returns next week, as lawmakers weigh the economic benefits against the environmental and infrastructure costs of these massive facilities.

Sources:

• State Rep. Reggie Miller introduces stronger legislation regarding data centers | WEMU-FM | https://www.wemu.org/wemu-news/2026-04-06/state-rep-reggie-miller-introduces-stronger-legislation-regarding-data-centers
• The Metro: Data centers, coming to a community near you | WDET | https://wdet.org/2026/04/01/the-metro-data-centers-coming-to-a-community-near-you/