Data Center Taxes May Fund WYDOT Roads

Wyoming lawmakers voted Monday to advance a bill that would create a new trust fund for the Wyoming Department of Transportation using tax revenue from data centers.

The Transportation, Highways and Military Affairs Committee approved the measure by an 8-2 vote. If the bill becomes law, 40% of the electricity sales taxes paid by data centers will go directly to WYDOT. This money is intended to help close a funding gap that state officials say has grown significantly over the past few years.

WYDOT Director Darin Westby told the committee that the agency faces a projected shortfall of $500 million. Of that total, $300 million is needed specifically for road maintenance and projects. Committee Co-Chair Landon Brown, R-Cheyenne, acknowledged that he has historically opposed new trust funds. However, he stated that he staunchly supports this specific measure after hearing about the department's financial struggles for a decade. Brown described the bill as one of the most profound ways to fix the agency's budget issues.

Sen. John Kolb, R-Rock Springs, was one of the two committee members to vote against the proposal. Kolb argued that the state should rely on its existing permanent mineral trust fund rather than spreading assets across new accounts. He noted that the Wyoming Constitution requires a two-thirds majority in both legislative chambers to pass such a bill because it involves investing public money in corporate stock. Rep. Lee Filer, R-Cheyenne, made several changes to the bill before the vote. Filer increased the percentage of electricity sales taxes directed to WYDOT from 25% to 40%. He also added a requirement for utility companies and power generators to report to the Wyoming Department of Revenue how much electricity they sell to data centers.

Filer included power generators in the reporting requirement because the Legislature is considering multiple plans to add third-party generators to Wyoming's energy system. The committee also advanced two other bills to help WYDOT. One would allow the department's commission to sell bonds, while the other would let the department borrow money at a low interest rate from the state's permanent mineral trust fund. That mineral trust fund holds approximately $13 billion in investment accounts funded by industry taxes.

Filer pointed out that the Legislature raised the gasoline tax from 14 cents to 24 cents per gallon in 2013 to fund highway maintenance. Since then, he said, the cost of labor and materials has risen faster than the revenue from the fuel tax. Without adequate road infrastructure, Filer argued, the state's industries will struggle to survive. The new bill would not use the portion of sales and use taxes that is currently set aside for direct distribution to local communities. A staff comment included in the bill text noted that Wyoming still offers tax exemptions for data centers, including breaks on software, equipment, backup power, and HVAC supplies if costs exceed $2 million in a single year.