Wherever you look in Arizona, you can see data centers stirring up local political battles.
Marana residents are organizing a ballot measure to stop a 600-acre data center, and the town council’s approval of the project might cost some of the council members their seats.
Tucsonans spent most of last year railing against Project Blue, a 300-acre project that was developed under a shroud of secrecy from local officials.
Chandler officials put the kibosh on a new data center in December after hours of listening to residents’ concerns about noise and quality of life.
The list goes on, and it will keep growing if Arizona remains one of the top sites in the country for data center companies.
Most of those battles take place in cities and towns, where residents worry about their electric bills going up or they’re uneasy about data centers powering AI and bringing on an apocalypse.
Now, the landscape for those local battles could change dramatically as the Arizona Legislature considers new laws regulating data centers.
As you might imagine, Democratic and Republican lawmakers have very different ideas about how to address the issues raised by the local battles. Basically, Democrats are trying to pump the brakes on building data centers in Arizona, while Republicans are focused on land use rules that make it easier.
That divide isn’t unique to Arizona’s politics. Across the country, Democrats and Republicans are aligning themselves with different sides of the data center battle.
A recent poll showed Republican voters are more willing to have a data center pop up in their neighborhood than Democrats. That difference of opinion helped power recent victories by Democratic candidates for governor in Virginia (which has more data centers than any other state) and New Jersey. They won by saying they’d force data center companies to upgrade the grid and keep utility bills down.
Regardless of their political differences, Arizona lawmakers are going to need bipartisan support if they want their data center bills to become law.
Most of those bills would raise state revenue and that means they need support from two-thirds of the Legislature.
Talking ‘bout tax incentives
So far, the only thing Democratic and Republican lawmakers agree on is ending the state’s tax incentives for data centers.
You may have heard about those incentives being put on the chopping block over the past few weeks.
Democratic Gov. Katie Hobbs called for an end to the “$38 million dollar corporate handout” in her State of the State address last month, while also saying data center companies should “pay their fair share for the water they use.” (As she noted, she supported the original bill offering the tax breaks back in 2013 — in fact, all Democrats, and only a handful of Republicans, did.)1
A few days before Hobbs’ speech, Republican Rep. Neal Carter introduced HB2119 that would stop any new tax incentives for data centers at the end of the year, instead of in 2033 as current law allows.
Democratic Sen. Mitzi Epstein also is trying to repeal the tax incentives, including the lucrative tax exemptions for data center equipment, with SB1467.
Carter and Epstein’s bills are fairly straightforward. But several of the Democratic bills that go after the tax incentives also deal with issues raised during local protests that don’t have anything to do with tax incentives.
A bill from Democratic Rep. Quantá Crews, for example, addresses local skepticism about electricity, as well as water use and how many jobs would actually come from data centers.
Under her HB2738, data center companies would not be eligible for tax relief unless they show they will pay all costs for dedicated electric utility upgrades, as well as file annual reports on employment, capital investment and energy and water use.
Land rules
Democratic bills usually don’t fare well in the GOP-controlled Legislature, so it’s anybody’s guess whether those bills will even get a hearing in committee.
Republican lawmakers, on the other hand, actually have a shot at getting their bills heard.
For now, GOP-sponsored bills are focused on land use, which was the Achilles’ heel for several data center projects in Arizona that needed local officials to approve rezoning requests.
Republican Rep. Justin Wilmeth, who chairs the House’s AI committee, wants counties to designate land for data centers, along with land for modular nuclear reactors.
Under HB2452, every Arizona county with more than 125,000 residents, which is about half the state’s counties, would have to update their comprehensive plans to include enough land, and in the right places, for the “effective use” of that land for data centers.
“Obviously, there’s a lot of talk around data centers these days, concerns, misunderstandings, likes, dislikes, all that stuff,” Wilmeth said at a hearing of the AI committee last week, adding “We can’t just get in there and carve them out and throw them away, because it’s going to be a big part of our economy as we move forward.”
That bill passed out of the AI committee along party lines.
Republican Rep. Jeff Weninger wants the State Land Department to develop a map identifying state trust land parcels that could be suitable for data centers.
Under Weninger’s bill, HB4009, which was introduced last week and hasn’t got a hearing yet, state officials would be required to consult with the data center industry as they develop the map.
We used our legislative intelligence service, Skywolf, to follow all the bills that could change how local data center dramas play out, and maybe even determine whether Arizona keeps attracting new data centers at all.
You can use our data center bill tracking list to follow along as these bills make their way through the Legislature.
Deepfakes at the worst possible moment: The eyes of the nation have turned to the disappearance of Nancy Guthrie, mother of “Today” show host Savannah Guthrie, in Tucson. The case also has shown how AI-generated images seep into virtually every aspect of our lives. When Savannah Guthrie posted a message on social media for anyone who may have abducted her mother, she highlighted the dangers created by deepfakes.
"We are ready to talk. However, we live in a world where voices and images are easily manipulated. We need to know — without a doubt — that she is alive, and that you have her,” Guthrie said.
30 minutes or less: Arizona lawmakers are dabbling with using AI to write legislation, lobbyist Kevin DeMenna told KJZZ. He asked AI to write a bill that would tax pepperoni pizzas and “after a couple of tries, we ended up with a 13-page bill that addressed some of the more nuanced aspects, like an effective date for the tax,” DeMenna said. Still, AI tools aren’t perfect. The AI thought for some reason that the Registrar of Contractors needed to be referenced in the pizza bill.
Who’s really behind the wheel?: Autonomous cars might not be as autonomous as the public was led to believe. The chief safety officer for Waymo, which operates in Phoenix, testified before Congress that the company hires people in places like the Philippines to “provide guidance” when self-driving cars need a hand.
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Dreaming big: The Independent Party candidate for Arizona governor, Hugh Lytle, says if he was elected he’d start an AI university that would charge students just $99 per semester, the Lumberjack News’ Arria Williams reports. The long-shot candidate was at Northern Arizona University to talk about college affordability.
“[AI] is already a part of school culture, whether it is embraced or not, I don’t know,” Lytle said. “It depends on the instructor, I believe, or the school. I don’t believe it is a panacea. I do believe it is a strong first step, though, in democratizing education and lowering costs.”
1 The fact that Democrats supported the tax break and Republicans did not was probably more because it was wrapped up in a budget that also expanded Medicaid coverage to draw down more money from the federal government under Obamacare. The original bill proposing the tax-break policy was sponsored by then Republican Rep. Jeff Dial, who represented the Chandler area, which was already becoming a tech mecca back then.