Governors across the United States are increasingly altering their stances and implementing stricter measures concerning data center development as midterm elections loom and public sentiment turns against the energy-intensive facilities. The political landscape surrounding these massive server warehouses, crucial for artificial intelligence products and cloud computing, is impacting gubernatorial races in key states.
In Pennsylvania, Democratic Gov. Josh Shapiro announced that his administration will no longer prioritize data center projects for construction permits or offer lucrative tax exemptions if they fail to meet specific requirements. These conditions include covering the full cost of electricity consumption, limiting water usage, and engaging in local community outreach. Shapiro, who has been the target of criticism from his Republican opponent, Stacy Garrity, stated that an "unacceptable number of speculative proposals for data centers swamp our commonwealth — many of them led by developers who have no regard for local communities."
Similarly, in Texas, Republican Gov. Greg Abbott has faced scrutiny. Democratic challenger Gina Hinojosa released a television advertisement accusing Abbott of prioritizing data center companies over constituents. Hinojosa has sought to capitalize on discontent in rural areas, where data centers are perceived as a threat to rural life, ranchland, and water supplies. Abbott, who previously championed data center recruitment, has since directed regulators to ensure Texans are not burdened by increased electricity costs due to data centers and has pledged to pursue legislative measures for regulation, including the potential elimination of state tax breaks.
Across the country, local communities have been rejecting data center projects through zoning and permitting board votes, fueled by concerns over the loss of open space, rural character, and quality of life. Issues such as noise from generators, property value impacts, and strain on water resources and electricity grids are common points of contention.
The surge in data center construction is largely driven by the expansion of artificial intelligence. While smaller data centers have existed for decades, modern facilities are often significantly larger, consuming substantial amounts of energy. Governors who were once proponents of these developments are now reevaluating their policies. Arizona Democratic Gov. Katie Hobbs secured legislative agreement for a three-year moratorium on the state's sales tax exemption for data centers, labeling the previous incentives a "corporate handout." New York Gov. Kathy Hochul, also a Democrat, implemented a one-year ban on large data centers to allow for the establishment of environmental and energy grid protections. Illinois Gov. JB Pritzker has halted new sales tax exemptions for data centers pending the imposition of stricter operational standards by lawmakers. In Ohio, both the Democratic and Republican gubernatorial nominees have proposed policies requiring developers to meet more rigorous standards.
In Wisconsin, Democratic nominee David Crowley is navigating a nuanced approach, acknowledging the economic benefits of data centers while emphasizing local veto authority. His Republican opponent, U.S. Rep. Tom Tiffany, has used the issue in his campaign, criticizing Crowley's stance.