Pennsylvania is keeping closer tabs on data centers under the new state budget.

But an 11th hour move to end a state sales tax exemption for data centers was left out of the final budget enacted Sunday.

Lawmakers left Harrisburg for summer recess without tackling another relevant issue — allowing local officials up to 18 months to delay action on new data center applications while they consider local impacts.

The 18-month moratorium bill, Senate Bill 1345, sponsored by state Sen. Jarrett Coleman, R-Lehigh, advanced Sunday in the Senate, but didn’t reach a floor vote. Coleman said it would give local officials time to adopt new ordinances dealing with data centers.

The emergence of more than 60 data center projects, particularly in urban and suburban areas of Pennsylvania, led to calls this spring for more state and local oversight of data centers.

Provisions in the new Fiscal Code, Senate Bill 146, aim to give state officials more information about the impact data centers have on energy demand and water use.

Data centers with a peak capacity of more than 10 megawatts are required to file annual reports on energy and water use with the state Department of Environmental Protection.

The first reports are due July 1 2027. A data center faces a $10,000 daily civil penalty if it doesn’t comply.

PJM, the regional transmission system operator, is required to give power load forecasting information to the state Public Utility Commission (PUC).

The PUC can request to review contracts and agreements that affect load forecast assumptions. Data centers are contributing to higher projections of energy use.

Sales tax exemption

The House and Senate passed separate legislation in recent weeks to repeal the state sales tax exemption for data centers.

But the two chambers didn’t agree on a common bill so it could be sent to the governor for signing.

There is no Tax Code bill in the budget package.

State Sen. Katie Muth, D-Montgomery, cited the maintenance of the sales tax exemption as one reason she voted against the state budget bill, House Bill 2400.

Pennsylvania enacted a state tax break for data centers during the pandemic when those enterprises were just a glimmer on the horizon.

The 2021 state Fiscal Code provides a 6% sales tax exemption on equipment purchased by data centers. This includes servers which process and store data.

Muth said the new Fiscal Code should have included provisions providing for residential setbacks and noise limits for data centers. Their absence from SB146 is one reason she voted against it.