PHOENIX — The debate over the future of data centers in Arizona could test unity among Democrats, who won a state government trifecta in last week’s election.
Attorney General Kris Mayes and a coalition of progressive groups have called for a statewide moratorium on new data centers, but Gov. Katie Hobbs says such a ban is not needed.
The incoming leaders of the Arizona Senate and House, however, say such a moratorium is not off the table. They spoke Tuesday after state lawmakers and Hobbs celebrated their election wins at the state Capitol.
“I don't call it a non-starter,” said state Sen. Priya Sundareshan, who will be president of the Senate. “I think we will be evaluating all of the proposals that are on the table, and we'll talk through what's possible.”
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Hobbs told ABC15 in September at a campaign event that she didn’t think a moratorium was the right approach.
“I don't think a statewide moratorium is the answer,” she said. “I think there are places where data centers make sense, and they're an important part of the high-tech economy that we're growing here.”
Hobbs said data centers need to pay for themselves, use water sustainably and not raise utility rates.
State Rep. Oscar De Los Santos, the incoming speaker of the House, told reporters Tuesday he’s confident Democrats in both chambers and the governor can reach an agreement.
“I think there is broad agreement, no matter who you speak with, that we need to ensure that data centers are not stealing our water, that they're not increasing our energy costs, and that we're not giving them ten of millions of dollars in tax credits," he said.
Hobbs and Democratic lawmakers secured a three-year freeze on state sales tax incentives for data centers as part of this year’s budget negotiations. Hobbs, De Los Santos and Sundareshan have all called for a repeal of the tax breaks.
The Arizona Commerce Authority received a rush of applications before the freeze went into effect, approving 107 projects for the incentives. The agency and the Governor’s Office both told ABC15 that not all of the projects may come to fruition – and that not every approval represented a new standalone data center.
“Governor Hobbs will keep fighting to make sure data centers work for Arizonans, not the other way around,” Hobbs press secretary Liliana Soto told ABC15 in a statement.
"Well, turns out that might not have yielded us as much as we were hoping for, so I think what we need is a much more serious and sustained ending of that tax break,” Sundareshan said.
