Data Center Backlash Reshapes Governor Races Ahead of Midterms
Governor races in key states are being reshaped by public anger over data centers, prompting candidates to propose stricter rules and tax changes.
The political climate around data centers is shifting rapidly, with governor races in several major states becoming battlegrounds over the massive server warehouses that power artificial intelligence and cloud computing.
In Pennsylvania, Democratic Governor Josh Shapiro announced his administration will no longer fast-track construction permits for data centers or grant lucrative tax exemptions unless projects meet strict standards. These include paying the full cost of electricity, limiting water use, and conducting local outreach. Shapiro, a potential 2028 presidential contender, faces pressure from Republican challenger Stacy Garrity as communities revolt against proposed projects. He described an "unacceptable number of speculative proposals" that disregard local concerns.
Texas has seen similar friction. Democratic challenger Gina Hinojosa released a TV ad accusing Republican Governor Greg Abbott of "selling out" Texans to data center executives. The ad targets rural areas where residents worry about ranchland loss and water supplies. Abbott, once a data center advocate, has now ordered regulators to protect consumers from higher electricity bills and has promised legislation to impose new rules, including potentially ending a billion-dollar-plus annual tax break.
Other states are also acting. Arizona Governor Katie Hobbs, a Democrat, backed a three-year moratorium on the state's sales tax exemption for data centers, calling it a "corporate handout." New York Governor Kathy Hochul ordered a one-year ban on large data centers to allow time for environmental and grid protections. Illinois Governor JB Pritzker halted new sales tax exemptions until tougher standards are set.
In Ohio, both major party nominees for governor—Democrat Amy Acton and Republican Vivek Ramaswamy—have released competing plans requiring developers to meet stricter criteria. Wisconsin's Democratic nominee David Crowley, who defeated a primary challenger advocating a one-year moratorium, has taken a nuanced stance, supporting local veto power while acknowledging economic benefits. His Republican opponent, Tom Tiffany, has attacked him in ads, dubbing him "Data Center David Crowley."
The backlash stems from concerns over lost farmland and open space, noise from generators, potential harm to wells and aquifers, and rising electricity costs. While small data centers have existed for decades, the AI boom has produced facilities larger than football stadiums, consuming power equivalent to small cities. This has fueled a wave of local rejections and growing political scrutiny across the country.