Once viewed primarily as an economic development issue, data center growth has emerged as a major policy platform in this year's gubernatorial contests, with candidates from both parties advancing policies that place varying limits and regulations on data center development. And as the November elections approach, candidates continue revise their data center positions.
Driven by the rapid expansion of artificial intelligence and cloud computing, proposals for new data centers have sparked debates over energy demand, water consumption, land use, tax incentives, and local control. As communities weigh the benefits and costs of hosting these facilities, nominees from both parties are increasingly staking out positions ranging from encouraging continued investment to imposing new regulations, moratoriums, or other restrictions.
Several major-party nominees have already released detailed plans, including California Democratic nominee Xavier Becerra and Ohio Republican nominee Vivek Ramaswamy. Others, such as Alabama Republican nominee U.S. Sen. Tommy Tuberville, have outlined their positions or issued statements that reflect, or respond to, growing voter concerns about data center development, and Kansas nominee Ty Masterson has released a ratepayer protection pledge that aligns with advancing the Trump administration’s national strategy involving data centers and energy costs and grid usage. While the approaches vary, ranging from continued support and regulation to moratoriums or bans, most candidates are attempting to address concerns over land use, energy consumption, environmental impacts, workforce and job displacement, and the balance between economic development and community interests.
Although Democrats and Republicans both share skepticism toward unchecked expansion of data centers, their policy prescriptions diverge in emphasis. In general, Democratic nominees favor stricter guardrails, environmental standards, labor protections, and community benefit agreements, coupled with the repeal or rollback of tax incentives and moratoriums or bans until studies or legislation have been conducted/enacted. Republican candidates generally emphasize conditional restrictions or the rollbacks of tax incentives while maintaining limited regulation on and the continued support of data center expansion.
Democratic nominees Doug Jones (Alabama) and Jonathan Kreiss-Tomkins (Alaska) both are advocating for moratoriums, with Jones calling for a one-year moratorium on new data centers in his state to establish safety guardrails, protect local resources, and ensure public transparency. At the same time, Kreiss-Tomkins supports a moratorium on all new data centers (similar to New York State) until the Alaska State legislature can pass comprehensive regulation on data center development, including requirements for local approval before data centers can be built, and binding community benefit agreements. Wisconsin Democratic gubernatorial candidate David Crowley has tempered his support for data centers to balance policies that address his union supporters and public opinion, while also providing distance between himself and his Republican opponent, U.S. Rep. Tom Tiffany. Meanwhile, incumbent governors Ned Lamont (Connecticut) and Kathy Hochul (New York) have already implemented major data center-related policies and are campaigning on advancing those positions. During his tenure, Lamont has signed legislation creating tax incentives for data centers that include strict environmental and community safeguards. He has also argued that data center expansion should support Connecticut’s technology sector while remaining consistent with the state’s climate goals and grid-reliability standards, including requirements related to clean energy integration and community benefits. At the same time, Hochul has presented a business-friendly data center strategy that seeks to balance technological growth with robust state oversight. Her proposal follows an executive order she issued in July, establishing the nation’s first one-year statewide moratorium on new hyperscale data center construction and related state permits.
Additionally, some Democratic incumbent candidates who have been supportive of data center development have now proposed new limits on the industry. In Arizona, Gov. Katie Hobbs supports continued data center growth but with stricter conditions, particularly regarding water use and sustainable development in the Phoenix metropolitan area. She has also called for community-benefit agreements, transparent utility arrangements, and environmental compliance reviews as part of the project approval process, and recently signed legislation that implements a three-year moratorium on new tax breaks for data centers. Other Democratic nominees emphasizing stronger oversight include Pennsylvania Gov. Josh Shapiro, who recently introduced GRID (Governor’s Responsible Infrastructure Development) standards, and Illinois Gov. JB Pritzker who suspended tax breaks for data centers amid concerns about rising electricity bills, grid strain, and water usage. Pritzker also called on state lawmakers to pass new data center reforms during the fall veto session.
Texas Gov. Greg Abbott has also shifted course. He recently paused approval of new data centers, a notable change after years of championing artificial intelligence and promoting Texas as a national hub for AI development and data center investment. For the most part, however, Republican nominees continue to voice stronger support for the industry than their counterparts, arguing that data centers are essential infrastructure that powers modern life and enables breakthroughs in fields ranging from medicine to artificial intelligence, and keeps the U.S. competitive. Oregon Republican nominee Christine Drazan announced she would oppose moratoriums and would not eliminate the specialized tax incentives that have encouraged data center development in her state. She has also said that, if elected, she would maintain the state’s existing tax-break programs. (Note: Drazan has since changed her position and would now support data center moratoriums.)
Drazan’s position of taking no action or altering/modifying the status quo of data center policy in Oregon differs somewhat from that of many of her fellow Republican nominees. Most GOP candidates favor some regulation or tax incentive repeals and rollbacks, while also empowering local governments and residents to make decisions on data centers rather than imposing statewide development restrictions. This includes U.S. Rep. Byron Donalds in Florida, Rick Jackson in Georgia, state Sen. Ty Masterson in Kansas, and Bruce Blakeman in New York. Other GOP candidates support some combination of regulation, limited moratoriums, or repeal of tax incentives, including Zach Lahn in Iowa, Darren Bailey in Illinois, U.S. Rep. John James in Michigan, State Treasurer Stacy Garrity in Pennsylvania, and U.S. Rep. Tom Tiffany in Wisconsin.
With the ever-increasing development and expansion of AI and data centers, their associated resource demands and disruption, and heightened community and electorate concerns, it is unsurprising that data centers have become not only a prominent issue, but a bipartisan concern with varying degrees of agreement in this year’s gubernatorial races. As the nominees from both parties debate how best to balance economic growth, energy and water demands, and community concerns, they also offer a continuum of policies and ideas as to whether data centers should be encouraged, regulated, or restricted, and underscore how rapidly the industry's expansion has become both an economic and political issue for states across the country. Data centers also pose a consequential priority for how administrations will navigate their states’ current and future position in the AI landscape and its advancement of TBED and innovation strategies.