Dealing with the Data Center Backlash
Southaven’s Mayor, Darren Musselwhite, is right.
Last week he told his aldermen that the data center development coming to his north Mississippi city carries national security implications. He called it patriotic. He pointed out that it will bring millions of dollars into the community, and he said it will rank among the most significant economic developments in DeSoto County’s history.
He is right on every count. He is also making that case against the wind.
Because there is a backlash against data centers, and it is growing.
It could be, as the mayor suggests, that the big companies have not done a good enough job of explaining what they are doing, or of showing the neighborhoods around them how they stand to benefit. Perhaps.
But I suspect this is bigger than a communications problem. AI data centers are turning into a live political issue heading into the midterms, with voters across party lines telling pollsters they are worried about higher utility bills and about strained water and power supplies.
Most alarming of all, I saw Texas Governor Greg Abbott boasting on X that his directive has halted up to 1,800 data center projects.
Now, if I had been a fly on the wall when Abbott’s team decided to send that, I suspect the thinking ran something like this. Issue a directive insisting that data centers must not take water needed by local communities, must not take power needed by the grid, and must not push up the cost of electricity — safe in the knowledge that data centers do not actually do any of those things. On that reading, an anti-data-center tweet is political positioning rather than a substantive move against them.
Maybe so. What worries me is what it concedes.
Once a Republican governor of Texas has publicly stamped on data centers for being water-hungry, for raising power prices and for disrupting rural communities, it becomes that much harder for anyone else to show that they do not.
We conservatives need to think through our policy response — and quickly.
Which is why I was so excited to see Grover Norquist of Americans for Tax Reform propose a brilliant idea.
States, he suggests, should require that the tax payments made by data centers go to reduce property taxes at the local level, and income taxes at the state level.
Why is Grover’s suggestion so wonderful?
Because there is a danger in what is coming. Look at Madison County, where Amazon’s data centers are projected to send around $14 million to the county, its schools and its community college in 2027 — rising to roughly $145 million a year by 2033. That is an extraordinary injection of money into a single county.
And extraordinary injections of money have a habit of growing local government. There is a real danger that some municipal government somewhere decides to turn 1970s Scandinavian.
Much better if those proceeds go on paying down property taxes instead.
That shows a real benefit to a real community. High property taxes are unfair on everyone, but they fall hardest on older folk on fixed incomes. We have arrived at a crazy situation in which a family that has finished paying for its home is essentially having to lease that property back from local and state government for as long as they live in it.
Grover’s idea does something else, too. It helps mayors like Darren Musselwhite. Instead of asking a neighborhood to take a development on trust, he could point at a smaller tax bill and say: there it is.
As luck would have it, Grover Norquist is coming to speak at our annual Gala in a couple of months, where you can hear him expand on this excellent idea. Buy your ticket here.