Illinois Governor JB Pritzker has proposed a two-year hiatus from offering tax incentives for datacenters, a reflection of growing public pushback against the massive, resource-hungry facilities that power the modern AI boom.
Pritzker made the proposal in his annual State of the State address, which covers Illinois’ budget and policy plans, requiring the support of state lawmakers. The plan was first reported by NBC News.
“In light of growing demand and rising costs, I am proposing a two-year pause on the authorization of new datacenter tax credits,” Pritzker said. “With the changing energy landscape, it is imperative that our growth does not undermine affordability and sustainability for our families.”
Concerns about how datacenters impact nearby residents and drain resources have become a growing political issue around the world, as companies often invest huge sums to build sprawling facilities against the wishes of local communities. Amid bipartisan pressure ahead of midterm elections later this year, several big tech companies such as Microsoft and Anthropic have said they will cover rising power costs related to demands from their datacenters.
In addition to calling for the suspension of tax incentives, Pritzker demanded that northern Illinois power grid operator PJM be ordered to absorb the additional costs of datacenter developers’ electricity demands.
“PJM must force datacenter developers to pay capacity resources to power their operations to protect customers from higher rates,” Pritzker said.
Much of the Pritzker speech, and the mention of datacenters in particular, focused on the topic of affordability — a central political narrative this year amid the rising cost of living in the US and Donald Trump’s main focus ahead of his election in 2024. As Democrats and Republicans claim to bring affordability, datacenters and their developers are increasingly under fire. Peter Navarro, Trump’s trade adviser, said earlier this week that the administration could force datacenter builders like Meta to internalize electricity costs, but did not elaborate on how that would work.
Illinois was one of the earlier and more proactive states in creating laws and policy around the AI boom. In 2024, Pritzker signed a series of bills dealing with AI clones and artists’ rights, employment discrimination, and the use of deepfakes for child sexual abuse. State lawmakers and Pritzker also vowed to oppose Donald Trump’s executive order last year, which was aimed at preventing states from creating their own regulations on AI. The state also has stricter biometric privacy laws than the rest of the US.
Several other states, including Georgia and Oklahoma, have proposed a moratorium on building new datacenters pending further assessment of potential regulation. A bill proposed in Georgia would freeze new datacenters until March of next year, a significant break in an industry poised for rapid progress and unfettered growth.
