Missouri’s Data Center Deals: Big Promises, Bigger Bills

Missouri’s combination of incentives—including state sales-tax exemptions, local Chapter 100 abatements, and discounted utility rates—are aimed to attract hyperscale data centers. However, in reality, these measures largely eliminate expected public revenue gains and instead transfer costs and risks to households, small businesses, schools, and local services.

The Sales Pitch vs. The Balance Sheet

For ribbon-cuttings and headlines, these projects look appealing: billions in “investment,” promises of cutting-edge tech, and of high-wage jobs. But once you follow the money, the picture flips. The State exempts most sales and use taxes on construction materials, equipment, and even utilities for a decade or more. Cities and counties then use Chapter 100 to abate property taxes and exempt building materials. Electric and gas utilities add economic development discounts that are explicitly backfilled by other customers. And thanks to modern ratemaking tools, the grid upgrades needed to serve these around-the-clock loads are deferred onto future bills.

“Private gains, public risks—that’s the math Missouri’s data center incentive stack creates.” -Act for Missouri

Bottom line: the “benefit” column is mostly private, while the “costs” column is public and recurring.

How the Incentives Stack Up (and Compound)

1. State Data Center Sales-Tax Exemption
   New data centers meeting modest thresholds receive state and local sales/use tax exemptions on construction materials, machinery, equipment, and utility costs for up to 15 years (10 years for expansions). This erases the largest, most reliable taxes from a build—materials, gear, and massive electric load—for a decade-plus.
   Learn More: What the Data Center Sales-Tax Exemption Covers

   For qualifying facilities:

   • State & local sales/use taxes on construction/rehab materials
   • Machinery & equipment purchases
   • Electricity and utilities used directly in operations

   Duration: 15 years (new facilities) or 10 years (expansions), once thresholds are met.

2. Local Chapter 100 Abatements (Industrial Development Bonds)
   Through this program, a city or county temporarily owns the project, making it tax-exempt. Real and personal property taxes are partially or fully abated for up to 10 years, and building materials are purchased sales-tax-free. The result is a hollowed-out local tax base, forcing schools and services to rely on smaller payments (PILOTs) and levies to fill the gaps.
   Learn More: How Chapter 100 Really Works

   • A city/county issues revenue bonds for the project.
   • Title transfers to the municipality, which makes the facility tax-exempt during the term.
   • The municipality leases the project back to the company.
   • Property taxes are abated (often 50–100%) for up to 10 years; the firm pays negotiated PILOTs (Payments in Lieu of Taxes) instead.
   • Construction materials qualify for sales-tax exemption through the municipality’s certificate.
   • At the term's end, title returns to the company and full taxes resume.

   Plain-English impact: Real and personal property taxes—and sales taxes on materials—are reduced exactly when the project is largest and newest. PILOTs rarely equal what full taxes would have been.

3. Discounted Electric & Gas Rates (Economic Development Riders)
   Large new loads qualify for base-rate discounts on electricity (e.g., 35% for 5 years) and gas (about 25% for four years). By law, the revenue shortfall from these discounts is spread across all other customer classes. In short, the biggest power users pay less, and everyone else pays more to make up the difference.
   Learn More: The Electric Discount Everyone Else Pays

   • Large “new load” customers can get years of base rate discounts.
   • Statute requires the utility to allocate the lost revenue across all customer classes using a uniform percentage adjustment.
   • Translation: households and small businesses backfill the break given to mega loads.
4. “Plant-in-Service Accounting” (PISA) & Similar Deferrals
   Utilities can defer 85–90% of the cost of new grid investments into a regulatory asset. This asset is later added to the rate base and recovered from customers, with a return, for decades to come.
   Learn More: PISA in One Minute

   Utilities can book 85–90% of depreciation and return on new grid assets as a "regulatory asset." Later, that balance is added to the rate base and amortized—with a return—on customer bills. The bottom line: big grid interconnections today lead to higher bills tomorrow.

5. Other Local/Regional Add-Ons
   In some metro areas, authorities can also use Chapter 353 (blight) or Port Authority tools to layer on additional abatements and exemptions.

What Missourians Actually Get (and Don’t)

• Few permanent jobs. Hyperscale sites are capital-intensive but staff-light, often employing dozens, not hundreds, of permanent staff after a temporary construction burst.
• Minimal tax revenue during peak years. The years when a project spends the most (buildout and early operations) are precisely when exemptions and abatements are strongest.
• Downstream cost exposure. Discounted tariffs and accounting deferrals guarantee that ratepayers and local budgets absorb the difference—through higher utility rates, new levies, or forgone services.
• Environmental & infrastructure strain. Constant, 24/7 electricity demand and significant water use for cooling add risk to power and water systems that may already be constrained.

The net effect is a privatized-gain, socialized-cost deal structure baked into Missouri statute and local policy.

Case Study: St. Charles Shows a Different Path

In August 2025, St. Charles residents organized against a roughly 440-acre data center proposal that was shrouded in non-disclosure agreements and lacked specifics about its impact on power, water, and noise. Public pressure halted the application, and the city enacted a one-year moratorium on data center permits. It’s proof that communities can press pause, demand transparency, and evaluate the true costs before committing.

Policy Fixes to Re-Balance the Equation

Act for Missouri believes that the best answer for Missouri is to oppose all large Data Center projects. That said, there are some legislative items that our General Assembly should address to bring the balance of power back toward the citizens of Missouri and away from the large special interests driving projects like these.

• No cross-class cost shifts. If a project gets discounted rates, prohibit spreading the shortfall to other customers; require the company to make up the difference or forgo the discount.
• Protect schools and services. Set minimum, non-negotiable PILOT floors (in Chapter 100 bond agreements) indexed to actual service costs for school districts, fire, and county services.
• Sunlight on negotiations. Ban NDAs involving government officials and require public disclosure of power and water demand ranges before approvals are granted.
• Water-use guardrails. Require closed-loop/air-cooling or non-potable water sources, along with mandatory curtailment during drought alerts.
• Job reality checks. Tie incentives to net new payroll (not capital expenditures) and include clawback provisions if promised job numbers aren’t maintained.

Closing: Choose Transparent, Balanced Development

Missouri can pursue real growth without writing blank checks. We must align incentives with public outcomes—reliable and affordable utilities, and honest job headcounts—not just with private investment milestones. St. Charles proved that citizens can say no to lopsided deals. The rest of the state can, too.

References

1. RSMo §144.810 — Sales and Use Tax; Data Center Exemption Framework. Missouri Revisor of Statutes. https://revisor.mo.gov/main/OneSection.aspx?section=144.810
2. Data Center Sales Tax Exemption — Program Guidelines. Missouri Department of Economic Development. https://ded.mo.gov/media/pdf/data-center-sales-tax-exemption-program-guidelines
3. Chapter 100 — Program Overview. Missouri Department of Economic Development. https://ded.mo.gov/programs/business/chapter-100
4. Chapter 100 Program Benefits (PDF). Missouri Partnership. https://missouripartnership.com/wp-content/uploads/2019/03/Chapter-100-Program-Benefits.pdf
5. RSMo §393.1640 — Economic Development Tariffs; Electric. Missouri Revisor of Statutes. https://revisor.mo.gov/main/OneSection.aspx?section=393.1640
6. RSMo §393.1640 — Uniform Percentage Allocation Note. Missouri Revisor of Statutes (PageSelect view). https://www.revisor.mo.gov/main/PageSelect.aspx?bid=35106§ion=393.1640
7. RSMo §393.1400 — Plant-in-Service Accounting (PISA). Missouri Revisor of Statutes. https://revisor.mo.gov/main/OneSection.aspx?section=393.1400
8. SB 564 (2018) — Public Utilities; PISA Summary. Missouri Senate. https://www.senate.mo.gov/18info/bills/SB564.HTM
9. SB 638 (2023) — Discounted Gas Rates; identical to HCS/HB 1143. Missouri Senate Bill Summary. https://www.senate.mo.gov/23info/BTS_Web/Summary.aspx?BillID=4167354&SessionType=R&SummaryID=10996660
10. HB 1143 (2023) — Gas Corporations; 25% for four years (PDF). Missouri House Bill Summary. https://documents.house.mo.gov/billtracking/bills231/sumpdf/HB1143I.pdf
11. St. Charles moves to ban data centers for 1 year. GovTech. https://www.govtech.com/policy/st-charles-mo-moves-to-ban-data-centers-for-1-year
12. Documents link secretive St. Charles data center to Google. St. Louis Public Radio. https://www.stlpr.org/economy-business/2025-09-08/documents-link-secretive-st-charles-data-center-google
13. Towns are saying no to AI data centers. Washington Post. https://www.washingtonpost.com/nation/2025/10/13/data-center-bans-lawsuit/