Pima County Board directs lobbyists to probe data center sales-tax exemptions amid Project Blue debate

The Pima County Board of Supervisors voted 4-1 on Aug. 5 to amend its 2026 legislative agenda to direct the county—s contracted lobbyists to investigate eliminating state and local sales‑tax exemptions for computer data‑center equipment.

The motion, introduced and explained by Supervisor Steve Allen, directs lobbyists to "investigate the elimination of data centers state and local sales tax exemptions" and passed with Supervisor Christie opposed. Allen said the item was meant to make the county—s preference explicit as Project Blue, a proposed large data‑center development, progresses through project review.

County lobbyist Michael Rossi told the board the exemption was created in 2013 to attract data centers to Arizona and is a state sales‑tax exemption that reduces the shared sales‑tax base counties and cities receive. Rossi said Arizona was experiencing rapid data‑center growth and argued there is "a pretty darn good argument" the exemption may no longer be necessary to attract the industry.

Supervisor Christie asked which government level imposes the tax and whether repeal would affect county or city revenue. Rossi replied it is a state program (the computer data center incentive program) and noted the exemption decreases the shared sales‑tax base; he said some city revenue could also be affected depending on how the exemption is applied. Rossi and Supervisor Allen later reported the program will stop accepting new applications for certification after Dec. 31, 2033, but awards already certified can extend benefits up to 10 additional years (potentially through 2043).

County Administrator Lehi Lesher and Rossi urged caution about broad language that would target all tax exemptions. Rossi and County legal counsel said repeal of an enacted tax credit would require a two‑thirds vote of both legislative houses under Arizona law (Proposition 108 rules). Board members discussed focusing first on this specific program rather than a blanket repeal of all exemptions.

Board members who supported the motion cited concern about lost shared revenue for counties and the need to ensure corporations "pay their fair share." Supervisor Connell said the move aligns with actions other Arizona municipalities and state lawmakers are taking to reassess incentives and community benefits. Supervisor Cano said the item was a way to pursue additional revenue the county can use for local services.

The board directed staff and its lobbyists to research the exemption's details and legislative options, including the sunset timing and the exemption's effect on county and municipal revenues. The board vote was recorded as 4 in favor, 1 opposed (Supervisor Christie). The board asked staff to return with more information and to coordinate with the County Supervisors Association and local legislators.

Why it matters: The county says the data‑center incentive reduces the state sales‑tax base shared with local governments; with large projects such as Project Blue estimating billions of dollars in taxable equipment costs, the exemption could materially affect local revenues. The board—s action signals interest in pursuing changes at the state level and lays groundwork for lobbying and legislative outreach.

What—s next: County staff and the contracted lobbyist will provide follow‑up research on the program's current terms and the fiscal impacts to Pima County and municipal partners, and will coordinate with legislators and the County Supervisors Association.

Speakers quoted in this article spoke during the county meeting on Aug. 5, 2025.