When Gov. JB Pritzker signed tax incentives for data centers into law in his first year as governor in 2019, Republicans and Democrats celebrated the plan as an economic driver.
“In today’s world, data centers are as critical a part of our infrastructure as our roads, trains and schools,” Pritzker said in October 2019. “With the legislation I signed into law, we are welcoming a surge of economic development, labor income, and good union jobs to Illinois.”
Now, eight years and nearly two full terms later, the governor has paused those incentives as the onset of data centers has stressed energy and water resources and public opinion has swiftly turned against the tech behemoths.
At the crux of the changing debate on data centers is the advent of artificial intelligence. The technology requires a new class of data center: hyperscale, always-on facilities that require massive amounts of energy.
“We weren’t talking about AI hyperscalers back in 2019,” Pritzker said at an unrelated news conference earlier this month. “I’ve already taken action. We’ve taken away the data center tax credits that existed, but it’s with the goal of getting legislation that will ensure that the people of Illinois, the businesses of Illinois, are not having burdened upon them higher electric rates, higher water rates, or having environmentally unsound practices by these data centers.”
Polling conducted this spring on behalf of the Illinois Clean Jobs Coalition, which has led the push for data center regulations, showed Illinoisans from across the political spectrum favoring legislation that would require hyperscale data centers to bring their own energy and establish new reporting requirements on water use and environmental impacts.
Pritzker’s Republican opponent Darren Bailey has also evolved in his support of data centers. While seeking to seize on their unpopularity by blaming the governor for the incentives package, he’s making AI a major piece of his campaign strategy.
“To be anti-AI, anti-data center, that’s not what this is about at all,” Bailey said in an interview. “This is about protecting the people.”
Evolving tech landscape
The changing public perception of data centers tracks with the evolution of the industry — and that’s led political candidates to take notice.
“I think political candidates have sort of realized more within the last year or so just how important this issue is to voters because it goes so far beyond just energy bill impacts,” Illinois Environmental Council spokesperson Hannah Flath said. “Regardless of your political affiliation, regardless of where you live in the state of Illinois or across the country, you have a reason, at least one reason, to be concerned about data centers.”
Per the Clean Jobs Coalition survey, when respondents were asked whether they would support regulations on data centers “to minimize their impact on our utility bills, climate and water while still allowing them to be built,” 68% of respondents said they would somewhat or strongly support such legislation. Support was slightly stronger at 71% among Democrats and Independents, though 62% of Republicans also supported the idea.
Bailey told Capitol News Illinois that finding ways to regulate data centers falls back to one of the themes of his campaign: affordability. He said new utility regulations for the facilities will help lower Illinoisians’ utility bills while ending tax credits will lower property tax burdens as data centers cover a greater share.
He pointed to Pritzker’s signature on the 2019 law establishing a tax incentive program designed to attract data centers to Illinois. Bailey voted against it when he was a state representative. Though he opposed the original bill, he — and every other member of the Senate at the time — supported a law in 2021 that expanded it.
That program committed more than an estimated $650 million in tax exemptions to 34 data center projects before Pritzker put it on pause in June, according to the Department of Commerce and Economic Opportunity, after lawmakers failed to act on his request for new data center regulations in the spring session.
Pritzker celebrated the groundbreaking of several new data centers in Illinois before AI significantly burst onto the scene, including the opening of Meta’s data center in DeKalb in November 2023.
“It isn’t an accident, though, that Meta and many other tech giants are seeing massive potential in our great state for data center growth,” Pritzker said that year. “Their decision to locate here is a reflection of the hard work that our General Assembly members and our administration have done to position our state to win this business.”
A year later, he was present at the groundbreaking for CyrusOne in Aurora, where he said electricity in Illinois is “readily available and reliable.”
But by the beginning of this year, Pritzker’s focus shifted to new regulations as the industry evolved. The governor asked lawmakers in his February State of the State address to impose a two-year moratorium on new data center tax credits and further demanded data centers now supply their own electricity.
“We need to think critically about our future energy usage with the needs of Illinois households at the forefront,” Pritzker said at the time. “So, in the face of rising demand and surging prices, I’m proposing a two-year pause on authorization of new data center tax credits. With the shifting energy landscape, it is imperative that our growth does not undermine affordability and stability for our families.”
‘An essential service’
Advocates — including the same organizations that criticized the governor this spring for a “lack of engagement” on passing data center regulations — said no one, not even Pritzker, could have foreseen the challenges data centers would bring.
Andrew Rehn, policy director of the Prairie Rivers Network, said 2019 was “a different world” in terms of data centers.
While traditional data centers have existed for decades in Illinois, the new hyperscale data centers needed for AI require significantly more energy, water and space. Some of the largest proposals, Rehn said, would consume half the energy of the entire city of Chicago, and take up a space as big as Central Park.
“It feels like, well, why is this conversation new? And of course, the answer is generative AI,” Rehn said. “It’s not just that we’re aware of something that wasn’t there. It is that what they’re doing has changed, or the scale of what is happening has changed in a meaningful way.”
Advocates for the data center industry say they know public opinion views them unfavorably. Brad Tietz, director of Midwest government affairs for the Data Center Coalition, said in an interview much of that comes down to misconceptions, and that the industry should listen to communities and address their concerns.
“You can’t discount the fact that the data center industry is providing an essential service that we all rely on as residents and businesses,” Tietz said. “And data centers bring significant economic benefits to the communities in which they locate.”
One such misconception that members of the data center industry point to is that all of Illinois’ new hyperscale data center proposals would support AI. Rather, most are still used for traditional cloud computing and digital business infrastructure. Specific concerns of running afoul of the state’s strong biometric privacy law have also preemptively kept some AI developers at bay, according to industry insiders.
Complicating the regulatory picture, a growing swath of the population would prefer full moratoriums on new hyperscale data centers to aggressive regulation.
Of the 21% polled who opposed the proposed regulations, more than half said they did so because they opposed hyperscale data centers being built at all.
“People want, at the very least, to see these regulations in place if they are going to welcome data centers — and the benefits that do come with them — to their local community,” Flath said.
Positions shift
Even nearly six months into the general election for governor, the data center debate continues to evolve.
Bailey seemed to initially balk at Pritzker’s incentives pause during a news conference responding to the State of the State address, as he listed the proposal among others from Pritzker that he disapproved.
“We heard about new fees on social media companies, new regulations on insurers, new spending initiatives and even a pause on data center tax incentives at a time when other states are competing aggressively for investment,” Bailey said.
But, speaking to Capitol News Illinois this month, Bailey argued his campaigning forced Pritzker to support more rigorous regulations. When asked to provide evidence of that, a spokesperson for Bailey pointed to social media posts he made in April — two months after Pritzker announced his proposal.
Alex Gough, spokesperson for Pritzker’s campaign, said the decision to pause the tax incentives program was not inspired by Bailey.
Bailey also claims Pritzker is personally benefiting from data center construction in Illinois, specifically Meta’s site in DeKalb.
“He owns 25% of Facebook. God bless him for that,” Bailey claimed of Pritzker while campaigning in Chicago last month.
Financial disclosure records show Pritzker does own stock in Meta, managed through his blind trust, and though it’s not clear how much, it’s nowhere near Bailey’s claim — A 25% stake in the company would be worth approximately $375 billion, over 87 times Pritzker’s estimated $4.3 billion net worth.
Meta CEO and founder Mark Zuckerberg owns roughly 13% of economic interest in the $1.5 trillion company and 61% voting power, according to its 2026 proxy statement. Other major investors include BlackRock and Vanguard, which each own around 6-7%.
State law also requires the governor to disclose every asset for which he, his wife or his children have direct beneficial ownership interest exceeding $10,000.
While Bailey voices concerns about data centers, his campaign often posts artificial intelligence-generated images on social media, including an image of a campaign button that said “say no to data centers,” which Facebook labeled as an AI image. He argued that doesn’t make his position on data centers inconsistent.
At a forum last month in Lake Zurich, Bailey said data centers are necessary, though he’s wary of tax incentives for them.
“We’ve got to have the data centers, in time. We had the race for space; we had the arms race,” Bailey said. “This new race is technology, and we cannot let China beat us in the race.”
Current policy positions
Pritzker also hasn’t adopted an anti-data center position, despite his support for more regulations.
“Illinois has an opportunity to continue leading in technological innovation and economic growth, but we also have a responsibility to protect working families and local communities as the data center industry rapidly expands,” Pritzker said in his June announcement directing the state to pause processing new data center tax incentives.
Pritzker said he wants data centers coming to Illinois to bring their own resources rather than depending on the same utilities and water residents and other businesses use.
“We’re not going to incentivize you. We’re going to tell you that you’ve got to bring energy with you if you’re going to come, and you’ve got to have closed-loop systems that make sure that you’re not contaminating our water or taking too much of our water,” Pritzker said at a forum on quantum last month, addressing data center developers.
The pause was designed to give lawmakers more time to pass new regulations when they return to session in November after the midterm election. But it also upset labor leaders who see the projects as a benefit to their unions.
“This pause does nothing to lower utility bills, protect the grid, or advance clean energy,” labor leaders said in a statement in June. “Instead, it will send billions of dollars in investment and thousands of union jobs to Indiana, Kentucky, and Ohio — states that sit on the same electrical grid, where those data centers will be built anyway, just without Illinois workers protected by nationally leading labor standards and without the clean energy requirements we’ve collaboratively fought to establish here.”
Upcoming legislation?
More recently, prominent labor leaders have circulated a proposal for a legislative framework that would restart the tax incentive program and reshape the state’s biometric privacy law to be more favorable to AI developers, while setting baseline transparency standards around the use of nondisclosure agreements.
The proposal calls for requiring binding community benefit agreements, closed-loop water cooling systems with incentives for use of treated wastewater, use of union labor agreements, and a bring-your-own-energy model, prioritizing grid interconnection for projects that support renewable energy development.
Pritzker said last week the idea is “not a bill” and declined to take a position on it. He said in June the state needs to focus on “responsible growth” for the industry that also protects the state’s resources.
Bailey wants to go a step further and pause tax incentives for all data center projects, even ones currently getting a break from the state, until there’s a greater understanding of their effects on water and electricity.
“I think we need to have an immediate halt because ultimately, if we continue on this path that we’re going on, energy prices are going to continue to skyrocket,” Bailey said.
He said “it’s a matter of making a better deal” that also addresses energy problems. And though he noted in February other states are also competing for data centers, he doesn’t think pausing tax exemptions will harm growth in Illinois.
“Everybody wants tax breaks, but these data centers are coming, and I really personally believe they’re going to … build regardless,” Bailey said.
To solve the energy problems from data centers, Bailey agreed they should provide their own energy, but also advocated a rollback of the state’s landmark climate legislation to allow fossil fuel operators to continue generating energy. He added that data centers should also pay into a fund that would be given back to consumers as relief of their utility bills.
While the candidates battle over data centers on the campaign trail, Pritzker said last week that passing new regulations should be a priority when lawmakers return for their fall veto session.
“This has been going on for quite some time, but they need to come to a conclusion, and I believe that something should be voted on in the November veto session,” Pritzker said.
Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.