Why Cities Say Yes to Data Centers Even When Residents Say No

By Cody Gents, Menomonie Alderperson - Ward 7

Cities do many important things: build and repair roads, maintain law and order, provide public parks, enforce building safety standards, and much, much more. I think most of us would agree that these are worth paying for, though we might disagree on how to pay for them. Another important note is that costs pretty much always rise. Whether because the city expands services due to public demand or because the costs of goods go up due to inflation, the result is the same. Cities operate on tight budgets and consistently need more funds year after year. 

In Wisconsin, a city has only a handful of ways to cover these rising costs without cutting services: taxes, fees, debt, grants, and shared revenue. 

Shared revenue comes from the State of Wisconsin via the budget passed every two years by the legislature and governor. So, technically, it still comes from taxes, but it passes through Madison first. Cities have zero direct control over how much shared revenue they get.

Cody Gentz

Grants can come from anywhere, but most often they come from the state or federal government. Grants usually cover one-time costs or specific projects, and they often involve a complicated, time-consuming "grant writing" process. They also often involve complicated and time-consuming reporting and administration. Grants are not really a reliable source of funds. 

Debt is debt. You don't want too much, and you don't want to rely on it for recurring expenses.

Fees are straightforward: somebody pays the city in exchange for a service. Building inspections, water utility usage, licensing, permitting, waterpark admissions, rural fire coverage payments, city hall office leases, and so on. In some cases, fees are capped or regulated by state law.

Finally, everybody's favorite: taxes. Most Wisconsin cities can levy three types of taxes. The first is property tax, which is a tax charged on the assessed value of land and whatever is built on it. The amount of property tax a city can collect is limited by state law. The second is a hotel (room) tax - sort of like a sales tax on hotel room bookings. Most room tax dollars are required to go toward tourism initiatives. The last is the wheel tax, which is an extra charge added to the cost of registering your vehicle. These funds, by law, must be used on transportation related costs. 

How does this relate to data centers? One word: development. Development, the construction of new buildings, homes, and businesses, is one of the only reliable ways for a city in Wisconsin to raise the money it needs to cover the services its citizens deserve. If a city needs to hire additional firefighters, but they don't have the budget, what do they do? Apply for a grant or take out debt? Maybe, but probably not - salary costs are on-going. Shared revenue? We can ask the state government for more, but they don't have to listen. Increase fees? They could, but it’s probably not going to be enough to cover whole salaries.

The only other option is raising taxes. As stated, room taxes and wheel taxes are reserved for specific purposes, so that just leaves property taxes. But wait - state law says we can only raise property taxes by the percentage of "net new construction" we had (other than a few narrow exceptions). In other words, the amount of property tax we can raise is directly tied to the amount of development we had the previous year. Note: This cap limits how much the city can collect overall, not what any individual homeowner pays, which still depends on assessments. An important exception to this rule is referenda - the citizens could vote to tax themselves more, if they think it's important enough. But this puts even more pressure on existing taxpayers.

These hyperscale data centers backed by mega corporations promise cities boatloads of development, which, in theory, leads to a ton of “net new construction” and boatloads of tax revenue from the new business. The municipal finance system Wisconsin has created for us incentivizes cities to say “yes” to projects, no matter how harmful they may be. Develop or die.

City councils are made up of your neighbors, and they are trying to manage the symptoms of a broken system. A system that demands more construction, more development, more capital, more, more, more, year after year after year. We cannot go on like this. Our people and our planet cannot take it.

If you want to see the effects of broken municipal finance, you don’t need a degree in public administration - you just need eyes. It’s the potholes you hit on your way to work. It’s the park bathroom that never reopens. It’s the firefighters working overtime because they’re short-staffed again. When cities can’t keep up with costs, corners get cut, services get stretched, and residents end up paying the price.

This isn’t an accident. For decades, the State of Wisconsin has steadily stripped power away from local governments, leaving cities with fewer tools and more responsibility. Local leaders are expected to solve real problems - roads, housing, emergency services - while Madison tightly controls how they’re allowed to pay for them. That imbalance is what pushes cities toward extreme solutions like massive data center projects, even when residents don’t want them.

The fix isn’t “more taxes.” It’s better tools and more local control. Just like any responsible household or business, cities should be able to spread costs more fairly instead of relying almost entirely on property taxes. Tools like a land value tax, or targeted taxes on pollution or recreational substances, could shift the burden away from homeowners, renters, and retirees, while giving communities real choices about how they fund public services.

Madison shouldn’t be micromanaging how cities fill potholes or staff fire departments. Those decisions belong with the people who live with the consequences. Restoring meaningful municipal home rule isn’t about growing government - it’s about trusting Wisconsinites to govern their own communities.