BGOV OnPoint: Data Center, Privacy, AI Rules Lead New State Laws

Arizona, Ohio, and Illinois have also paused tax breaks for data centers.

The actions reflect growing state-level scrutiny of the infrastructure required for AI and cloud computing. New York's moratorium aims to allow time for studying the environmental and grid impacts of data centers. Virginia's tax on electricity consumption is designed to generate revenue for energy infrastructure. The pause on tax breaks in Arizona, Ohio, and Illinois indicates a reassessment of incentive programs.

These state measures come amid increasing demand for data centers to support AI workloads, which consume significant energy and water. The laws represent a shift from previous efforts to attract data centers through tax incentives, toward managing their growth and environmental footprint. No federal legislation on data center regulation has been passed.