Overview:
The order prohibits companies from getting relief on a tax that supports schools. It also requires companies seeking a tax break to commit to cover power costs.
Nevada Gov. Joe Lombardo (R) has signed an executive order prohibiting data centers from receiving relief on a tax that supports local schools and requiring that all data centers receiving the incentives commit to covering their own power costs.
The order also requires state officials to propose how to limit delays in meeting the exponential growth in data center power needs across the next decade.
“This order sets clear expectations while opening the door to billions in responsible investment, good-paying jobs, and long-term economic growth for Nevadans,” Lombardo said in a statement.
It’s the most significant move that Lombardo — who has previously called data centers the state’s new “gold rush” — has made in response to the increasingly controversial industry.
However, it only places guardrails on companies that are applying for new state tax breaks. Environmental advocacy groups are pushing for the state to enshrine in state law an existing effort from state regulators that requires all data centers to cover grid costs. The governor’s office said it would have to review any legislation before commenting but reaffirmed Lombardo’s commitment that data center costs are not passed down to ratepayers.
The order, which comes less than two months before the election, goes into effect immediately.
In a statement after signing the order, the governor’s office said “Nevadans shouldn’t have to wait to resolve these critical issues,” and that “Waiting for the legislature to get this right is never an effective strategy.”
It follows the circulation of a data center strategy memowritten by Republican pollster and strategist Tony Fabrizio that was obtained by The Nevada Independent. The memo outlines how “unqualified support for building more AI data centers is a losing position” and offers strategies to address the negative sentiment without taking a hardline stance. That includes requiring developers to pay for their power, guaranteeing ratepayer protection and stipulating that there are “no blank checks.”
There are 76 data centers planned or built in Nevada, according to the online tracker Data Center Map. The state has given out $461 million in expected tax breaks to data centers in the past 11 years.
Under the state’s existing incentive program, data centers can receive relief on personal property taxes and sales and use taxes. In addition to prohibiting abatements on a tax that supports schools, the order also says that companies cannot get relief on the portion of sales and use tax revenue that goes to the state’s general fund.
The governor’s office did not immediately respond whether companies can still get an abatement on other sales and use taxes that go to local governments. Since the start of the tax break program, local governments have missed out on $300 million in revenue from these specific taxes, an Indy analysis found.
Until July 2025, the state had to approve tax breaks to data centers that applied for them as long as the company pledged to meet all requirements. Since the law was changed to give the state more autonomy in approving the tax breaks, members of a state board that Lombardo sits on have approved about $50 million in projected tax incentives to data centers.
The order comes in the heat of campaign season. Groups tied to Lombardo and Nevada Attorney General Aaron Ford (D), who is running for governor, have released ads criticizing the other’s record on data centers.
Ford has pledged to pause new data center tax breaks pending a review of their economic return to the state. He also has supported a statewide ban on evaporative cooling, a water-intensive process — already banned in Southern Nevada — used by some data centers.
In a press release Friday, the governor’s office took an indirect jab at Ford. He was one of the sponsors of the 2015 bill that created the data center tax break program, and the press release criticized that legislation for having “no protections for energy and water use and no flexibility to deny those abatements.”
In a statement Friday, Ford called it a “last-ditch excuse for an executive order” that “is not a reflection of what Nevada communities are asking for.”
The Data Center Coalition — an industry trade group — said in a statement Friday that “we have concerns that some of the policies in his Executive Order create additional hurdles to data center development in Nevada.” The statement, which was highlighted by the governor’s office, also said that “we share the Governor’s commitment to job creation and protecting Nevada’s natural resources.”
What’s in the order
Under the order, Lombardo is directing the head of the Governor’s Office of Economic Development (GOED), which oversees the state’s tax break program, to only bring forward tax break applications if the data center pledges to pay all local school support and sales and use taxes.
A Nevada Independent analysis found local governments missed out on more than $537 million in sales and use tax revenues because of the tax breaks. This doesn’t mean local governments are losing money, but rather it shows how much more money could have been collected if the abatements were not in place.
Of this total, local governments have also missed out on $236 million in school support taxes because of data center tax breaks — far more than any other tax break program.
“This executive order puts money back into our schools that otherwise would have been lost under outdated state law,” Lombardo said in a statement. “That wasn’t right, and I’m proud to correct it and make certain those dollars reach our classrooms.”
The Republican polling strategy memo, dated Monday, followed Lombardo’s campaign announcement of his vision for a second term. Among other things, it proposed allocating unabated money generated by a data center receiving abatements to K-12 education and workforce development. The proposal does not specify how it would achieve that, and Lombardo did not expand on it at a recent press conference about the topic.
The head of GOED must also not bring forward a tax abatement application unless the company has signed a new pledge — outlined in the executive order — committing to meet the water standard at its location, cover all electricity costs and not impede the public’s ability to receive electricity during a grid emergency, among many other commitments.
In his order, Lombardo referred to a portion of Nevada law that allows GOED to add certain requirements to an abatement application, but it does not specifically allow the governor to require the agency to add new criteria.
Asked for further explanation of the governor’s legal authority, his office referred to the new Nevada law allowing the GOED board to deny an abatement and Lombardo’s status as chair of the board.
Nevada Independent reporter Tabitha Mueller contributed to this story.
— This story is used with permission of The Nevada Independent. Go here for updates to this and other Nevada Independent stories.
