Rural Wisconsin has become a hotspot for data centers. State’s unique tax instrument explains why

This story was originally published by The Daily Yonder.

Blaine Halverson joked that his only exposure to data centers was from the Mission Impossible movies in the 1990s. That was, until one came to his town. Over the last seven months, Halverson’s community of Menomonie, Wisconsin, population 16,700, has become a flashpoint in a growing debate over data center development and local control in the state. 

Halverson has lived in Menomonie, which is just over an hour east of Minneapolis, for most of his life. Like many others in his rural community, Halverson didn’t know much about the hyperscale data centers, built by the world’s largest technology companies, that are cropping up across the U.S. to power artificial intelligence. Then, in July 2025, Halverson was on vacation with his wife when he learned of a $1.6 billion data center proposal slated for around 320 acres of farmland on the outskirts of Menomonie. 

Immediately, Halverson had questions. 

“All of a sudden, I was activated,” said Halverson. “What really activated me was how far along this was, and that the public was just finding out.”

Over the next six months, Halverson and dozens of other concerned Menomonie residents coordinated a local opposition campaign that on January 5, 2026, resulted in Menomonie’s City Council revising a zoning ordinance to bar Balloonist, LLC, the developer representing an undisclosed ‘tech giant’, from moving ahead on construction. 

An attorney for Balloonist did not respond to the Daily Yonder’s request for comment. 

Halverson’s frustration about the project’s lack of transparency is one that has echoed throughout the state. In other rural counties and in villages sandwiched between larger cities like Milwaukee, Madison, and Green Bay, data center proposals in places like Beaver Dam, Port Washington, and Caledonia have been met with fierce opposition from residents. Developers eyeing land in Greenleaf, a village outside of Green Bay, and in Grant County, which borders the Mississippi River, have also faced community backlash. Commonly cited concerns revolve around project secrecy and the data centers’ projected energy usage, water needs, and financial impact on communities with small tax bases.

Beyond requiring vast amounts of power and water to keep operations running 24/7, large data center proposals in rural areas often represent a significant, if not dominant, share of the community’s tax levy. This leaves residents fearing what will happen if the planned data centers do not live up to their promises, should the stock market take a turn, the developers go bankrupt, or the technology inside the warehouse-like structures become obsolete. 

“They're not seeing the long-term risks,” said Prescott Balch about the elected officials who push for data center development in Wisconsin’s rural communities. Balch is a retired software developer and former technology executive at U.S. Bank. He also lives in Caledonia, Wisconsin, a rural village south of Milwaukee whose residents ousted a 244-acre Microsoft data center that was slated for land zoned for agriculture in October of 2025. 

“No investment advisor, for example, would ever let you do [that] with your investment portfolio. They’d get fired for saying, ‘Put all your eggs in this one basket.’ It doesn't matter how solid that one basket is. It's still one basket with a lot of risk if it walks out the door,” Balch said. 

A Hot Spot

Over the last year, rural Wisconsin has become somewhat of a hotspot for data center developers. The allure for Big Tech companies racing to build infrastructure to train and run complex AI models comes in the form of tax incentives, low-cost land, and, in many rural communities, flexible zoning codes. 

But residents like Halverson and Balch are taking notice and starting to organize together. Opposition groups that have formed in communities faced with data center proposals are using digital tools like Facebook and Signal to connect with one another across the Badger State. Now, a growing coalition of rural residents and environmental organizations are urging state legislators to regulate data center development and, in some instances, taking legal action to improve transparency. 

The debate over Wisconsin’s data center boom is both rooted in local governance and relevant to the national conversation about rising electricity costs. In an election year, data center infrastructure has become a political issue, yet it’s one that rural coalition members insist is nonpartisan. What’s on the ballot, including a crowded gubernatorial race, could influence that. 

Why Wisconsin?

To grasp why data centers are coming to Wisconsin, you have to understand a particularly wonky part of the state’s tax code, according to Port Washington resident Michael Beaster. A resident of the rural city just north of Milwaukee, Beaster opposes the $15 billion campus being built by Vantage Data Centers to serve end-users Oracle and OpenAI as part of their $500 billion Stargate campaign to develop AI infrastructure across the U.S.

The wonky policy Beaster is talking about is a tax incremental district, or TID. 

In Wisconsin, a TID lets developers pay their property taxes into a separate box from the rest of the community as a way to capture property value growth associated with new projects. During construction, a developer, like Vantage, contributes taxes to this special box to cover infrastructure costs associated with their project, like new roads and power lines. Depending on the terms of the TID, that tax money is then kept in the box until all infrastructure costs have been paid, often a period of 15-20 years. 

Typically, this kind of tax policy helps small- or medium-scale developers, like new packing plants or housing developments, pay for their associated infrastructure costs over time. With hyperscale data centers, however, rural residents worry that the high costs of the developments’ power and water infrastructure will rack up for the community to pay while the developers’ taxes sit in a special box. 

“If the village decides to raise the tax levy, it comes off the backs of the current residents only, and that is completely and utterly invisible right now to most people,” said Balch, who worked to reject Microsoft’s proposed data center campus in Caledonia last fall. 

In November of 2025, the city of Port Washington approved a TID that enables Vantage to pay upfront for the estimated $175 million in infrastructure costs, plus $91 million for an electrical substation and $187 million in interest, associated with their data center campus, including upgraded water and sewer mains and new power infrastructure. Port Washington will then be responsible for paying Vantage back for those infrastructure costs over time. 

The TID is set up as a pool of money to remain open for up to 20 years for the city to draw from to reimburse Vantage. Some residents, including Beaster, have expressed concerns that the financing model could end up raising taxes for locals. On January 2, 2026, a Port Washington-based group of activists filed a lawsuit against the city to challenge the TID. 

“People don't want to see their communities handed over to large corporations,” Beaster said.

Port Washington Mayor Ted Neitzke did not respond to the Daily Yonder’s request for clarification on whether the city’s TID would result in higher taxes for residents.

Last summer, a bipartisan measure in Wisconsin’s legislature updated the state’s tax incremental financing policy to exempt data centers from caps on the amount of money that can be held in a TID. The act mentions both Port Washington and Beaver Dam by name and was signed into law by Democratic Governor Tony Evers on July 8, 2025. In addition to TIDs, Wisconsin also offers a sales and use tax exemption to incentivize data center development. The exemptions are offered on a ladder based on a developer’s intended investment and the host county’s population, with less populous counties requiring less investment. For rural counties, the minimum investment required to claim the exemption is $50 million. 

For Asad Ramzanali, former deputy director for strategy at the White House Office of Science and Technology Policy under the Biden Administration, it is this kind of policy that goes against the idea that data centers should have to pay their “fair share”.  

“When the largest companies, the most well-resourced companies, in the history of the world are behind these data centers, it feels particularly unfair to have states level tax breaks for construction,” Ramzanali told the Daily Yonder. 

“People should not have to pay increased utility bills. People should not have to pay for transmission lines going up, [and] people shouldn't have to deal with dirty water sources because of a data center.”

Nonpartisan, but Political

With local pushback to data centers picking up steam, state legislators are taking note. Beaster said that’s a change from the attitude that some legislators had a few months ago, when his rural community members were mobilizing against the data center in Port Washington last summer and fall. 

“When we started really getting involved in trying to mobilize, we tried to write letters and emails and stuff to state legislators, and they just weren't very responsive,” Beaster said. “It felt to us like they were more interested in bringing these things here than regulating them.” 

In early December, 2025, Democrats introduced a bill to regulate data centers and entice them to take climate-friendly steps. Under the proposed legislation, residents would be protected from footing the utility costs associated with data centers. If passed, the bill would also subject data centers to an annual fee, ranging from $2-3 million, to fund clean energy and low-income heating assistance programs. The legislation also includes a measure to hinge state tax incentives, like the sales and use tax exemption, upon data centers using at least 70% renewable energy. 

In January, 2025, Republicans introduced a data center bill of their own, with similarities including mandated reporting on water usage and restrictions on passing development-related utility costs onto families and small businesses. The Republican legislation would also mandate that data centers wanting to use renewable energy would need to build those energy sources, like solar, on the same property. 

The utility provisions in both the Democrat and Republican-backed bills come as the Wisconsin Public Service Commission (PSC) prepares to hear a case in February of 2026, from We Energies, the state’s largest utility, that will determine how much data centers will have to pay for their infrastructure, and how much gets passed onto other ratepayers. 

We Energies has requested a pay structure that holds data centers accountable for 75% of their capital costs. That request has been challenged by the Wisconsin chapter of the Sierra Club, which argues large customers like data centers should be held responsible for 100% of their associated costs.

“This is the decision for how much the largest utility is making large customers pay, and right now the proposal is really bad for an average residential customer,” said Cassie Steiner, a senior campaign coordinator at Sierra Club. The PSC is expected to hand down a decision on the 2026 rate structure in the spring. 

Even as data center regulation captures lawmakers’ attention at the state capitol in Madison, organizers in Menomonie, Port Washington, and Caledonia maintain that local opposition isn’t tied to party. 

“One of the things that has been really amazing to me about this process is that I know the people I’m standing shoulder-to-shoulder with in this group, a lot of them never vote the same way I would when we go into the into the voting booth in November,” Halverson said of his work in Menomonie. 

“If it’s your farmland and your community, you’re an extreme environmentalist, and if it’s your power bill going up, then you’re a fiscal conservative.”

This article first appeared on The Daily Yonder and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.