Public backlash against the explosive build-out of data centers is raising the stakes for governors — especially moderate Democrats as they set new ground rules but face hardening criticism from within their party for backing the multibillion-dollar projects.
Democratic Govs. Josh Shapiro of Pennsylvania and Mikie Sherrill of New Jersey late last month rolled out new standards for the energy-guzzling technology hubs, including measures aimed at protecting electricity ratepayers and the environment. Other governors, like Gretchen Whitmer in Michigan and Abigail Spanberger in Virginia, are confronting sharp divisions among fellow Democrats.
The New York Legislature on Thursday approved a one-year moratorium on large data centers. If Gov. Kathy Hochul signs it, New York would be the first to impose a statewide pause on development.
And on Friday, Illinois Gov. JB Pritzker hit pause on tax exemptions for new data center proposals as lawmakers in Springfield hammer out a broader policy agreement.
Money from the tech industry and jobs for the construction trades made good economic and political sense for governors in past years. But local opposition to data center projects that are pushing deeper into rural areas is complicating pro-business messages and plans for building more of the sprawling high-tech campuses for artificial intelligence. That’s creating new fault lines for Democrats, with candidates on the left attacking party leaders for being too accommodating to Big Tech — and attaching themselves to calls for moratoriums on data center projects and voter concerns about water use, higher utility bills and lucrative industry tax breaks.
“Democrats are shooting themselves in the foot politically on this issue,” said Will Lawrence, who’s running in a competitive three-way Democratic primary in central Michigan to unseat Republican Rep. Tom Barrett.
“People are desperate for somebody to stand up to Big Tech, to stand alongside communities. They see that Trump and the GOP aren’t doing it,” he said.
But it’s a political tightrope. In Illinois, organized labor and environmental interests are on opposing sides after Pritzker’s move to slow development, setting up a clash between Democratic allies. With many of the same tensions buffeting Democrats in Pennsylvania and Michigan, Shapiro and Whitmer say investments from Amazon or OpenAI can fuel their Rust Belt economies. And in Virginia, Spanberger is treading carefully. State leaders have for years sold data center owners on favorable tax treatment and access to the region’s high-tech cables and high-voltage power lines. Northern Virginia is dubbed “Data Center Alley.”
Data centers are part of a complex political landscape for sitting governors who chase big corporate whales to locate in their states. They also want a seat at the table as the rules of AI and its infrastructure are written.
Republican governors are also grappling with it, even as many of deep-red states seem more accommodating. Utah Gov. Spencer Cox signed an executive order a week and a half ago that seeks to assuage concerns that large data center projects could take water from the Great Salt Lake and drive up utility bills. And GOP Gov. Mike DeWine of Ohio paused tax breaks that go to developers while the state reviews data center growth.
Benchmarks and bans
Shapiro, who is running for reelection and considered a Democratic contender for president in 2028, has positioned himself at the center of the energy affordability debates raging in the Northeast. Shapiro has sought to make Pennsylvania a leading state for AI and energy infrastructure investment. But he’s also led regional governors in efforts to control rising electricity prices as data centers are built.
In the plan he laid out in writing late last month — after first introducing its broad tenets in a speech in February — Shapiro sought to increase community involvement and protect ratepayers. Shapiro’s Republican challenger for governor, Pennsylvania Treasurer Stacy Garrity, quickly sought to contrast herself with the governor by calling for a “total data center pause.”
“His evolving policies, and many of the updated policies that require more of data centers, are a clear recognition that unbridled support for data centers was not politically a great position to be in,” said Chris Borick, director of the Institute of Public Opinion and professor of political science at Muhlenberg College in Pennsylvania.
A February poll of Pennsylvania registered voters by Quinnipiac University found 68 percent said they would oppose building an AI data center in their community.
In Maine, Gov. Janet Mills vetoed a bill that would have put an 18-month moratorium on new data centers, the first statewide ban in the country, despite strong support among Democrats in the Legislature.
In her veto message, Mills acknowledged data center impacts on power prices and the environment. But she wanted an exception for projects with certain job and economic benefits.
One such project is under consideration in Jay, Maine. “That is Mills’ home area and is an area in desperate need of economic activity and jobs,” noted Mark Brewer, a political science professor at the University of Maine.
Four out of the five Democratic candidates in a race to replace her said at a forum that they would support the moratorium legislation.
In New Jersey, Sherrill took her first big step last month toward implementing her campaign promises. Her plan requires data center owners to supply their own power and pay for grid upgrades. She’s also tasking her state agencies with developing noise, light and pollution guidelines. Sherrill’s work could bring much needed balance to the data center debate at a time when dozens of New Jersey municipalities have already acted to ban the facilities, said Laura Matos, a Democratic strategist at MAD Global Strategy Group.
The Data Center Coalition, which represents developers and end users, said it is working with governors and legislative leaders, including in Pennsylvania and New Jersey.
Dan Diorio, vice president of state policy, warned against state policies that treat data centers differently than other large industrial developers “or impair the competitiveness of responsible data center developers who choose to invest in these states.”
Top spot for Whitmer
In Michigan, Whitmer saw swift pushback last week from some progressive Democrats for appearing with OpenAI CEO Sam Altmanand other executives for a groundbreaking at the site of “The Barn,” a $16 billion data center campus in Saline Township, southwest of Ann Arbor.
At the ceremony, Whitmer heralded “the largest economic deal in Michigan history.” She noted it would create 2,500 construction jobs along with permanent high-tech jobs and scientific advancement.
“AI will be a big part of America’s future,” Whitmer said. “We are all fueling the need for projects like this with the devices we hold in our hand, in our purse or in our pockets.”
“We cannot afford to let other countries dominate future industries like AI,” Whitmer said.
But the way the project came about fueled opposition. The local board last year initially rejected a rezoning proposal, and that drew a lawsuit. To avoid the lawsuit, the board reversed itself. OpenAI, Oracle and Blackstone have since pledged money for local programs and a financially strapped recreation center.
Lawrence, the Michigan Democrat running for Congress, called Whitmer’s appearance alongside Altman “insulting” to the people of the township and the surrounding region. Lawrence has called for a 12-month moratorium on new data center construction.
Whitmer’s office declined to respond to criticism.
‘Tough spot’ for Spanberger
Another Democratic governor with perhaps the most to lose — and gain — from data centers is Spanberger in Virginia, home to one of the world’s largest AI hubs.
Spanberger is battling it out with another Democratic leader over a tax exemption for the facilities. She’s also straddling a fine line between trying to foster a pro-business image and appeasing members of her left flank concerned about local protests over AI.
At issue is an existing sales and use tax waiver for data center computer equipment that is keeping almost $2 billion annually out of state coffers. Senate President Pro Tempore Louise Lucas, a Democrat, wants to end the state exemption next year and use the money for transportation and other programs. House leaders, who are more aligned with Spanberger’s position, are pushing to keep the exemption intact as planned through 2035.
On social media, Lucas has said voters will “cook” the governor if the two Democratic-controlled chambers don’t come to a resolution before a July 1 fiscal deadline.
Spanberger has said data centers should pay more, but doesn’t want to end tax incentives early.
“There is a path forward that makes sure data centers account for the energy they use without going back on the agreements Virginia has signed with companies,” said Jack Bledsoe, a Spanberger spokesperson.
Adding to the pressure are polls showing that more than 60 percent of Virginians support ending the tax exemption.
Stephen Farnsworth, director of the Center for Leadership and Media Studies at the University of Mary Washington, noted the project pipeline is expanding. The pressure to be “less pro-data center, particularly for a Democratic politician, is only going to grow,” he said.
Bob Holsworth, a longtime Virginia political analyst, said Spanberger’s pro-business tilt, and that of the state, is at stake.
That’s part of the reason she’s reluctant to pull the rug out from data center developers.
Politically, Virginia has a bluish tint. “But it’s not California,” Holsworth said.
