New Jersey pauses program used to dole out tax breaks for AI data centers
The program is run by the NJ Economic Development Authority and is responsible for doling out tax breaks to AI companies in return for jobs
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A state program designed to help AI data centers move into New Jersey and set up their sprawling complexes has been put on pause until further review by Gov. Mikie Sherrill's office.
The program is run by the NJ Economic Development Authority and is responsible for doling out tax breaks to AI companies in return for jobs. However, a decision to hold up the program comes after months of backlash against data centers, which can use tremendous amounts of water and electricity, often hiking rates on local homeowners.
The "Next New Jersey Program-AI" was started in 2024 by then-Gov. Phil Murphy. Under the program, companies like Coreweave in Kenilworth secured $230 million in tax breaks after promising the creation of 140 jobs.
But now the Sherrill administration wants a full review of the program to look at the effects on local towns and to see if the dollars being offered in tax subsidies are equal to the return.
“Each of those jobs would cost $2.2 million to create. What we are saying here is that if we put that money into local businesses and other economic improvements, then we could create far more jobs," said Ben Dziobek, with Climate Revolution Action Network.
His organization has been leading protests against data centers and the use of taxpayer money for such companies.
“What we’ve seen right now is that 20 municipalities have outright banned data centers," said Dziobek.
The NJEDA on Tuesday sent out a response to the decision.
“The NJEDA is temporarily pausing the acceptance of applications for the Next New Jersey Program–AI while it conducts a review of the program. The NJEDA is committed to supporting this emerging industry and the economic opportunities it can create for New Jersey residents, such as good-paying jobs. However, being a leader in AI innovation must be done in concert with Governor Sherrill’s efforts to ensure data centers operate responsibly and within strong, transparent guardrails.”
According to the National Conference of State Legislatures, 38 other states are also providing tax breaks for data centers.
