A new study predicts data centers expected to be built in Illinois over the next decade would create thousands of jobs and millions of dollars in new property tax revenue.
But many are skeptical the touted benefits will live up to their promises or outweigh the environmental and energy burdens.
The study by the Illinois Economic Policy Institute projected that $57 billion worth of new data center investments through 2035 will create 121,000 jobs. Most
of those would be temporary construction and other jobs throughout the economy, with just 2,800 of them direct, permanent positions.
After lawmakers failed to pass data center regulations in the spring session and Gov. JB Pritzker paused the state’s data center tax incentive program, a comprehensive study was needed to help guide policymakers on how to address residents’ concerns, according to Frank Manzo, an economist at ILEPI, a labor-backed research organization that “promotes thoughtful economic growth for businesses and working families.”
“There’s currently a trust deficit amongst the public, and Illinois can ensure responsible development of data centers to address that deficit, and we’ve come up with possible ways to do that,” Manzo said.
Recognizing the growing public distrust of data centers and concerns over their heavy water and energy consumption, the report put forth 10 policy proposals that it says could protect residents while preserving the state’s competitive position to attract data center development. Many were in line with a policy plan that stalled in Springfield in the spring, aiming to put guardrails on an industry while still promoting economic development.
“A moratorium sends investment to neighboring states,” Manzo said, adding that clear standards and guardrails “give developers certainty and can protect ratepayers.”
The Department of Commerce and Economic Opportunity estimated that, as of 2025, data centers received an estimated tax break value that exceeded $660 million.
There are already more than 240 planned or active data centers in Illinois, or 19 per 1 million residents.
The report found that data centers would also supply nearly $300 million in annual property tax revenue once operational, allowing local governments to reduce property taxes for residents by 3-10% if no tax abatements are offered.
Manzo said the impact of a data center on local property taxes would depend on its size, with larger ones eating more of the bill. He said the impact could also be especially strong in more rural and small counties, such as DeKalb.
The report shows that in 2024 while the tech company Meta paid $31 million in property taxes on their new data center in the county, average property taxes in DeKalb County increased by about 2% compared to 6% on average across the state.
“Every local community has to have their own voice and their own will expressed in these,” Robert Bruno, a University of Illinois professor who coauthored the report with ILEPI, said in an interview. “But as a possible source of revenue that could achieve a lot of good, it’s sizeable and it is a pretty reliable collective source of revenue for schools.”
But the city also reduced the property taxes paid on the sprawling Meta data center, lessening what the impact could have been for homeowners, according to Kristan Wong Karinen, a researcher at Good Jobs First, a national policy organization that advocates against corporate subsidies.
“Abating the taxes doesn’t help you at all,” she said, pointing to Illinois’ law limiting how much local governments can raise property taxes in a single year. “It just hurts any kind of gain you could have had from it.”
One of the report’s recommendations was to ban local property tax breaks so data centers help reduce local tax burdens by a greater amount.
Most data centers don’t employ many people after they are built. With 2,800 permanent positions expected to be created by the total $57 billion investment, data center developers are collectively spending $20.2 million per permanent job.
“If this were completely private money, it would be a different story,” Anthony Elmo, another Good Jobs First researcher, said. “These taxpayer dollars need to actually incentivize good long-term jobs and they’re not.”
Illinois Economic Policy Institute researchers said many of the jobs created by the data center projects pay well, including six-figure construction jobs. Thirteen projects in 2020 and 2021 created 8,000 construction jobs with wages over $100,000, according to the report.
The report also found data centers would create 41,751 consumer-demand-induced jobs over the next decade throughout the economy. These are jobs that range from local restaurant workers to factory jobs at places that manufacture construction materials.
Elmo questioned whether the growth of data centers will continue to be robust given the public backlash and likelihood they will face more regulations.
But Manzo said the counter argument is that these jobs could go to a different state — something Elmo said could happen anyway as technology progresses.
“As they are able to build their technology and build their ability to run data centers remotely and without permanent positions, how many of those permanent position will go away?” Elmo said.
The report acknowledges that a tradeoff for those job and property tax benefits is the increasing cost of energy driven by power-hungry, always-on data centers. The authors estimate the impact to average residential bills would be around an extra $12 per month, or $150 a year.
The report’s estimate was based on what researchers called a mid-level scenario, in which new data centers would add 6.5 gigawatts of energy demand to Illinois’ grid by 2035 — enough to power millions of homes.
That scenario, researchers said, would increase electric system costs overall by almost 10%. Other projections estimate the impact will be much higher.
Data from PJM, the regional transmission organization that manages energy flows in northeastern Illinois, forecasts that electricity demand from data centers will grow by 10.7 GW by 2035 in ComEd’s territory alone, though all projects are not guaranteed to come online.
The rest of the state is on the MISO grid, which is expected to see peak demand increase by 35% by 2035 across the 15 states in its territory, driven largely by data center development in states like Illinois, Indiana and Michigan.
Analysis conducted by the National Resource Defense Council last year predicted that average families in the PJM territory would see prices increase by as much as $70 per month by 2028.
Rising electricity costs don’t just affect residential bills but can also hurt businesses, Citizens Utility Board spokesperson Jim Chilsen said, as consumers have less disposable income.
“One thing that’s horrible for the economy is high electric bills, because when consumers are pouring all their money into escalating electric bills, they don’t have money to use to spark the economy in other places,” he said.
Many of the proposed policy recommendations are in line with the POWER Act, a bill that would have made data centers secure their own renewable energy supply and required water-use permits and transparency reporting, among other provisions.
The report also recommended a statewide ban on nondisclosure agreements with developers because they harm trust with the public, who are often left asking questions about data center projects that can’t be answered because of the agreements. The POWER Act would also ban such agreements.
Lawmakers didn’t pass the POWER Act in the spring legislative session, but advocates are optimistic the bill will advance during the fall veto session. Pritzker, who advocates criticized for a lack of engagement on the issue last spring, called on lawmakers to act last week.
The report also proposed limiting the incentives the state gives to data center developers. Researchers suggested raising the investment threshold and number of jobs that a data center creates to qualify for a state tax break, while also reducing the number of years the incentive lasts.
Christine Nannicelli oversees renewable energy policy at the Sierra Club of Illinois, which has advocated for stronger data center regulations. She said Illinois needs to prioritize rigorous standards, not just incentives for companies that choose to bring their own renewable energy and create jobs.
“The rubber hits the road when we talk about, are we incentivizing good behavior or are we going to require good behavior?” Nannicelli said. “This isn’t about offering fluffy tax incentives to do the right thing. We need to really raise the bar for this industry as a whole.”
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This story was originally published by Capitol News Illinois and distributed through a partnership with The Associated Press.
