Who Really Gets Paid When a $10B Data Center Comes to Town?

Key Highlights

• The West Virginia State Treasury modeled annual property tax yield from two certified High Impact Data Centers, estimating roughly $62.4 million from Penzance Management's $10 billion Bedington campus in Berkeley County and $40.9 million from Google's estimated $7 billion Putnam County project.
• Host county commissions and school boards retain about 62% of the incremental property tax in both counties, because voter-approved excess and bond levies sit outside the HB 2014 distribution formula.
• The formula applies only to the regular levy increment, sending 50% to the Personal Income Tax Reduction Fund, 30% to the host county commission, 10% to an All-County Fund, and 5% each to economic grant and grid stabilization funds.
• The $6 billion of server and IT equipment in the Berkeley model is appraised at 5% salvage value and produces about $4.4 million a year, roughly 7% of the project's total tax bill.
• Our read is that the paper corrects the most repeated revenue claim in the critics' case while leaving sales tax exemptions and ratepayer exposure outside its frame.

The News

West Virginia State Treasurer Larry Pack released an analysis by Treasury strategic analyst Mark Muchow modeling how property taxes from two planned High Impact Data Centers would flow to local governments under HB 2014, the Power Generation and Consumption Act of 2025. The paper aims to settle public confusion over how much revenue host communities actually keep, a question that has driven much of the state's data center debate. It estimates the Berkeley and Putnam County projects would together generate more than $100 million a year once fully built, with roughly 62% staying with county commissions and school boards. The full analysis is available from theWest Virginia State Treasury.

Analyst Take

Data center fiscal debates tend to split into two camps that rarely share a spreadsheet. One tallies what states forgo in exemptions and what ratepayers absorb in capacity charges. The other tallies announced capex and assumes the revenue follows. The West Virginia Treasury paper follows the dollars through the levy stack, line by line, and reads like it was written by people who reconcile ledgers for a living. They do.

The strongest version of the critics' case holds that HB 2014 diverts 70% of tax revenue to the state, leaving 30% for local governments, and that any statewide office has reason to defend a law the legislature passed at the governor's request. We take that seriously. Yet the arithmetic checks out, the Berkeley figure lands well below a roughly $94 million annual impact estimate attributed to State Tax Commissioner allocations that circulated in May, and Pack paired the release with a push for lawmakers to revisit state data center policy and expand local control. The 70% figure appears to describe one layer of the tax bill. Not the whole bill.

What Was Announced

The paper models two projects. Treasury models Penzance's Bedington campus at $10 billion in total: a $4 billion facility along with $6 billion of server-related equipment. The facility is 1.9 million square feet on 548 acres with 600 MW of critical IT capacity. Google's Putnam project lacks disclosed specifics, so Treasury assumes $7 billion. Some of that silence likely reflects ordinary corporate practice, but the gap may prove structural. HB 4983, signed in March, enacts certification rules that allow developers to keep designated business information out of public view (West Virginia Gazette Mail). That suggests future estimates of this kind will be difficult for anyone outside state government to replicate or challenge. Both projects are modeled as fully in place for Fiscal Year 2027, a simplifying assumption the authors acknowledge.

The design choice that matters most is the denominator. West Virginia property tax has two layers: regular levies set by elected officials, and excess and bond levies approved by voters. HB 2014's formula touches only the regular levy increment above the pre-development base. Think of it as a tollbooth on one lane of a two-lane road, where voters paved the second lane themselves. In Berkeley, regular levies represent roughly 54% of the project's tax bill. The school excess and bond levies, which together make up the full $28.3 million school figure, flow to the school board outside the formula. That is why a formula sending half its slice to the income tax fund still leaves host governments with the larger share of the total.

The school figures carry a caveat that Berkeley County has already raised with the state. Under the formula, the regular school levy increment is redirected entirely. West Virginia's school aid formula (W. Va. Code §18-9A-11) subtracts a computed local share (i.e. the yield of the regular school levy against assessed value, using 85 percent of the statutory school rate and a 4 percent uncollectible allowance) from each district's foundation allowance. A higher local share means less state aid. That calculation runs off assessed value, not off cash the board actually receives, so the tax base can rise even when the regular-levy increment is sent elsewhere.

Two $30 million figures are now in circulation, and they measure different things. In June letters to the state tax commissioner, Berkeley County put the potential state-aid reduction at about $30 million a year if High Impact Data Center property entered the local-share formula at the “around $5 billion of assessed HIDC” then contemplated, and called that its most severe financial risk. Separately, the West Virginia Center on Budget and Policy put regular school levy revenue at stake in Berkeley at roughly $30 million a year. That second number comes from the Penzance flyer citing State Tax Commissioner allocations of about $94 million on the $4 billion campus, before salvage valuation. Treasury's own Berkeley stack is $2.58 billion of assessed value, so any aid haircut computed on Treasury's numbers would land below the $30 million Berkeley flagged. The paper does not address the question. Until the state answers it, we read the $28.3 million as gross school revenue from excess and bond levies, with the net gain potentially landing below it.

The second design choice is valuation. Real property is appraised at cost and assessed at 60%. Qualified high technology equipment, under a 2009 valuation statute, is appraised at 5% salvage value from day one. In the Berkeley model, $6 billion of equipment becomes $180 million of assessed value. The building carries the bill. The silicon barely registers.

That inversion deserves an operator's attention. Anyone who has sat through a refresh-cycle budget review knows the hardware line is the one that never stays still. West Virginia's regime is architected so that equipment starts at the floor and never moves the tax base. Treasury notes that Ohio and Pennsylvania exempt this property entirely, while Virginia steps assessment down from 60% toward 5% over five years, placing West Virginia mid-pack on paper.

The paper also leaves out the waived state sales tax on qualifying equipment, construction-period activity, and real property depreciation after year one. We read these as scope limits rather than errors, but the conclusions travel only as far as the scope does.

Market Analysis

The national critique of data center incentives centers mostly on sales and use tax exemptions, and the evidence behind it has grown. Good Jobs First reported in June that the four states already known to lose more than $1 billion a year to data center exemptions have all disclosed or projected sharply higher costs since 2025. In Ohio, state tax data released in May showed 2025 costs running roughly 12 times the original projection, and Gov. DeWine paused new applications days later. On the grid side, PJM's independent market monitor attributed 63% of the 2025/2026 capacity auction price increase to data centers, about $9.3 billion recovered from customers across the region, a footprint that includes West Virginia.

The Treasury paper is silent on both. The state waives its 6% sales tax on high-technology purchases including computers, servers, and building materials for direct use. On our rough math, if the exemption covered the full $6 billion Berkeley equipment line at that rate, it would be worth about $360 million per equipment cycle, several years of the project's entire property tax yield. That is analyst arithmetic rather than a scored cost, and the direct-use scope of the exemption may shrink it, but it is likely the number critics reach for next.

Northern Virginia shows the alternative architecture. Data centers generate 38% of Loudoun County's general fund revenue, much of it through personal property tax on the computer equipment inside the facilities. West Virginia chose a different model in 2009: tax the shell, deeply discount the servers. For AI builds, where accelerators, networking, and liquid-cooled racks push equipment higher as a share of capex, that choice appears to move a growing portion of project value outside the effective tax base.

Labor intensity sharpens the point. Gov. Morrisey pitched the Bedington campus at a minimum of 125 permanent jobs at announcement. Against the $10 billion stack Treasury models, our math puts that at no more than $80 million of investment per permanent position. At that ratio, the tax base rather than payroll becomes the durable local dividend, which is why valuation choices carry so much weight in this debate.

The cost side is uneven across the two projects. According to the governor's office, Google has committed to cover the electrical, water, and sewer upgrades tied to its project so those costs do not reach residential households. Penzance, by contrast, is expected to be grid-connected, and no tenant had been identified at announcement. The 62% local share also rests on levies that voters, not developers, control. Pack acknowledged that the full 50% income tax fund share applies in counties without excess levies, which suggests the two case studies may flatter the statewide picture.

Looking Ahead

The key trend we'll be monitoring is whether salvage valuation becomes the next front in West Virginia's data center debate. The Treasury paper has, perhaps unintentionally, moved the argument. Critics anchored on the 70/30 split now face a document showing host counties keep most of the property tax, alongside a table showing why the total is modest relative to investment, roughly 0.6% of project cost per year. We expect pressure in the 2027 session to revisit local control and the 2009 valuation act together, since both now draw voices from both parties. We will also watch the first formal assessments, which the state tax commissioner told lawmakers remain years away, and whether an income-based valuation lands above or below the cost approach Treasury used. For hyperscalers and developers, the lesson travels well beyond West Virginia. Tax codes written for the server rooms of 2009 are now pricing the AI campuses of 2027.