Greg Abbott faces bipartisan pressure over data centers as backlash intensifies
Governor Greg Abbott and Texas lawmakers are facing increasing bipartisan pressure to address data center proliferation, with protestors gathering at the Capitol. Legislators are considering repealing a sales tax exemption for data centers and establishing new siting rules. This comes amidst growing concerns over the cost to the state, electrical grid strain, and local community impacts.
Texas Governor Greg Abbott is facing mounting bipartisan pressure to address the rapid expansion of data centers across the state. This week, lawmakers are considering options to limit or repeal a decade-old sales tax exemption for data centers, which is now estimated to cost the state over $1 billion annually.
Grassroots organizers from across Texas converged on the Capitol in Austin, holding protests and calling on Governor Abbott to convene a special legislative session to curb data center development. Speakers included Texas Agriculture Commissioner Sid Miller and Democratic candidate for Agriculture Commissioner Clayton Tucker, both urging immediate legislative action. Critics argue that the existing sales tax exemption, passed in 2013, has led to an unanticipated proliferation of data centers, putting a strain on resources and communities.
Governor Abbott has responded to the backlash by directing state regulators to ensure data centers do not burden ratepayers with new electrical infrastructure costs and has urged lawmakers to repeal incentives and establish new siting rules. His office cited a recent decision by an unnamed developer not to build a planned data center in Henderson County, partly due to the Governor's directive, as a positive outcome. Meanwhile, activists like Maggie Gannon from the Amanecer People's Project in El Paso continue to fight existing data centers, such as a massive Meta facility outside their city.
The discussions at the Texas Senate Committee on Finance also included concerns about the need for massive electrical transmission lines through West Texas, which critics argue are primarily being built to service the oil and gas industry and data centers, without benefiting local communities. The sales tax exemption, originally projected to cost the state $14.6 million in its first biennium, is now expected to cost $3.3 billion in 2028-2029, with the number of qualifying data centers nearly doubling in 2026 alone.