A report from Good Jobs First has highlighted that several US states and local governments are not adhering to generally accepted accounting principles (GAAP) by neglecting to report revenue losses from datacenter tax breaks. This issue is becoming increasingly prominent as states face potential billions in unreported revenue due to these subsidies.

The organization has identified 14 states failing to disclose their tax losses from server farms, with numerous local governments reportedly doing the same. The requirement for such transparency under GAAP was established by the Governmental Accounting Standards Board (GASB) since 2017.

Currently, only Washington State, Texas, and Virginia are reportedly complying by including these losses in their Annual Comprehensive Financial Reports (ACFRs), while others opt for less regulated Tax Expenditure Reports (TERs).

A key concern is the outdated nature of tax abatement laws, which were established when datacenters were much less impactful. Now, large-scale facilities consume colossal amounts of resources. For instance, Meta’s new Hyperion datacenter in Louisiana would occupy much of Manhattan.

The report underscores how these facilities contribute significantly to states’ revenue deficits, with Georgia losing $2.5 billion, Virginia $1.94 billion, and Texas $1 billion annually due to tax incentives aimed at datacenter operators.

Good Jobs First urges states to align with GAAP by annually reporting all datacenter subsidy-related revenue losses since 2017, emphasizing the fiscal impact on public budgets amidst growing public backlash against datacenter projects.