Data centers are set to face tougher headwinds in Texas under Governor-elect Gina Hinojosa as Republicans and Democrats have filed bills that look to regulate the industry in the state.
Hinojosa told CNN on Nov. 5 that the state is done with data centers unless the companies behind them prove they will benefit Texans.
"It is not that I hate data centers. I hate the way they are taking advantage of Texas, and that stops when I'm governor," said Hinojosa, adding she wants Texans to "have a seat at the table to decide if and how these data centers come into their communities."
Several state lawmakers have also filed bills ahead of the 90th legislative session, set to start on Jan. 12, that would curtail data centers in the state. Here's a look at the bills and
what they would do.
Texas GOP, Democratic lawmakers look to end data center tax incentives
Lawmakers have filed several bills, but one Senate bill is getting a lot of attention —SB 293 — because it would repeal the state sales tax exemption for data centers.
Houston Republican state Sen. Joan Huffman filed it, and 23 of the Senate's 31 members and members-elect have signed on.
San Antonio Democrat state Rep. Martinez Fischer also filed a similar bill in the House — House Bill 167 — that would also repeal the state tax exemptions; however, the two differ on how the projects already using the exemption would be treated.
Under the House bill, data centers already certified would keep their exemptions until their authorized exemption period expires. The Senate bill would end exemptions as soon as it becomes law, if passed as is.
State Sen. Judith Zaffirini, a Laredo Democrat, also filed two bills looking to curtail the expansion of data centers in Texas:
- SB 33 — The bill would require data centers to cover transmission costs from to their energy usage.
- SB 36— The bill would restrict computational facilities such as data centers from receiving state and local tax breaks and economic development incentives.
The current state of data centers in Texas
A poll from the University of Texas/Texas Politics Project released June 24 found that 56% of Texas registered voters oppose the construction of data centers in their communities, with 42% strongly opposed. The concerns stem from Texans' worries about how much power and water the centers need and how they will affect utility bills.
This has led several cities and counties to try to take matters into their own hands by issuing moratoriums. Recently, the city of Brownsville adopted a 90-day moratorium that went into effect on Nov. 5.
Outgoing Texas Gov. Greg Abbott faced public backlash over the rapid spread of data centers in the state during the election.
In June, he directed the Public Utilities Commission of Texas and the Electric Reliability Council of Texas to ensure data centers do not shift the financial and resource burden onto Texans during expansion and construction.
The regulations took effect in July. But after public testimony over the summer revealed gaps in the data the state requested, the state asked for more information.
On Aug. 3, Abbott paused construction of new data centers as the state conducted a full audit of proposed data centers seeking to connect to the state grid to ensure they comply with his June directive.
Since the audit and regulations were announced, more than 40 companies, including Amazon, Google, OpenAI and Anthropic, have publicly said they will comply with Texas' new data center standards.
On Sept. 14, Abbott directed the Texas Water Development Board to use its statutory authority to compel major water users to comply with the state's water-use reporting requirements and to impose legal consequences for past and future failures to comply with state law.
Seven days later,Abbott, on Sept. 21, ordered the Texas Commission on Environmental Quality to stop issuing permits sought by data centers until ERCOT completes its audit.
He also said no state agency can move forward with data center approvals until the grid and the Texas Water Development Board audit are done, because regulators need that information to make decisions.
Abbott is set to leave office in January 2027 when Governor-elect Hinojosa is sworn in.
Mateo Rosiles is the Texas Connect reporter for USA TODAY and its regional papers in Texas, based in Austin. Got a news tip for him? Email him at mrosiles@usatodayco.com.
This article originally appeared on USA TODAY: Bipartisan Texas bills target data center tax breaks ahead of session
