Governor JB Pritzker issued an order pausing state tax incentives for data centers in Illinois after the state legislature stalled his plan to keep data-center energy costs from affecting local residents’ bills.
Pritzker, a Democrat seeking his third term, said his order was in response to the legislature’s failure to raise data centers’ electricity rates, given their high energy usage, which he asked them to do in February. He plans to push the issue during the veto session in mid-November.
“Data centers are asking just too much for too little in return, whether it’s electricity or clean water,” Pritzker said in a video posted on X. “We can’t let them cause our utility bills to go up.”
Ohio paused tax incentives for data centers on Wednesday. Governor Mike DeWine ordered a halt to a program offering tax breaks while a committee studies the economic impact of the projects.
Read More: Ohio to Halt Data Center Tax Credits as Opposition Grows
The governor’s order on Friday also comes amid growing opposition to data centers. Development projects worth about $64 billion have been delayed or canceled across the US due to community pushback, according to industry researcher Data Center Watch. In January, the city council in Naperville, Illinois, voted down plans for a proposed data center in the Chicago suburb, where many residents expressed fears that the project would increase their water and energy costs.
Pritzker’s move puts him in opposition to a core Democratic constituency: organized labor, which has called for the tax breaks to continue. Unions support the incentives so that their members can build the data centers. Climate Jobs Illinois, an umbrella group representing 15 unions, issued a statement on Friday calling on Pritzker to reverse his pause.
“This pause does nothing to lower utility bills, protect the grid, or advance clean energy. 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,” the group said in its statement.
Read More: Pritzker to Halt Data Center Tax Perks as Power Bills Soar
Pritzker’s order won’t affect agreements entered into before July 1, and companies are still able to seek local tax relief support. The state provided almost $1 billion in tax incentives between 2020 and 2024, according to a report from the state’s Department of Commerce and Economic Opportunity. Illinois has seen more than $15 billion in investments from data centers.
Governor JB Pritzker of Illinois has issued an order to pause state tax incentives for data centers in response to the state legislature’s failure to address the rising electricity costs associated with these facilities. This decision comes as Pritzker, a Democrat running for re-election, seeks to protect local residents from potential increases in their utility bills due to high energy usage by data centers.
In February, Pritzker proposed raising electricity rates for data centers to mitigate the impact of their energy consumption on local residents. However, the legislature did not act on this proposal, prompting Pritzker to take immediate action. He has indicated that he plans to advocate for this issue during the veto session scheduled for mid-November, emphasizing that data centers are demanding too much while providing insufficient benefits in return, particularly concerning electricity and clean water usage.
Pritzker’s order coincides with similar measures taken in Ohio, where Governor Mike DeWine has also paused tax incentives for data centers while a committee assesses the economic consequences of these projects. This trend reflects a growing backlash against data centers across the United States, with community opposition leading to delays or cancellations of development projects worth approximately $64 billion, according to Data Center Watch, an industry research group.
In Illinois, local opposition has manifested in specific instances, such as the Naperville city council’s vote against a proposed data center in the Chicago suburb, where residents expressed concerns about increased water and energy costs. Pritzker’s decision to pause tax incentives puts him at odds with a significant Democratic constituency—organized labor. Unions are advocating for the continuation of these tax breaks, arguing that they are essential for securing jobs for their members in the construction of data centers. A coalition known as Climate Jobs Illinois, which represents 15 unions, issued a statement urging Pritzker to reverse his pause on incentives. They argue that this decision does not address utility costs, protect the electrical grid, or promote clean energy but instead risks driving billions in investment and thousands of jobs to neighboring states like Indiana, Kentucky, and Ohio, which share the same electrical grid.
Despite the pause, Pritzker’s order does not affect agreements made before July 1, and companies can still seek local tax relief support. Over the past few years, the state has provided nearly $1 billion in tax incentives to attract data centers, which have collectively invested over $15 billion in Illinois. This situation illustrates the complex balance between fostering economic development through data center investments and addressing the concerns of local residents regarding the environmental and financial impacts of such facilities.
As the mid-November veto session approaches, the discussion surrounding data centers in Illinois is likely to intensify, with Pritzker poised to push for legislative action aimed at regulating the energy costs associated with these operations. The outcome will be crucial not only for the future of data centers in the state but also for the ongoing dialogue about energy management, community impact, and economic growth within Illinois.
