From Texas to Ohio, the data center backlash is spilling over into the midterms

A groundswell of opposition to data center development in communities across the country has increasingly real consequences for the future of artificial intelligence and the upcoming midterm elections.

Data center companies pitch the projects as economic development that will boost the local tax base, Darrell West, a senior fellow at the Brookings Institution's Center for Technology Innovation, told Yahoo Finance. And there was a time when communities would pay incentives to attract that development.

"But people are not buying this argument anymore," West said. "In fact, they actually want companies to start paying their community for the right to build the data center in that area."

Now, with the midterm elections just a week away, candidates are seizing on that backlash and wielding the issue as a weapon against opponents. It's particularly fraught in Texas and Ohio, states with lots of data centers and tight Senate races.

In Texas, Republican Gov. Greg Abbott is running against James Talarico, a Democratic state lawmaker. West noted, "Governor Abbott a year ago was very supportive of data centers."

Since then, he has halted new permits for data centers while the state conducts energy and water audits.

In Ohio, Democrat Sherrod Brown, who is seeking a return to the US Senate, has called his GOP opponent Jon Husted "the face of data centers" over Husted's previous support for giving tax breaks to data centers.

The data center construction boom, meanwhile, is shifting from blue states to red states. Democratic strategist Steve Rattner recently posted on X that while 56% of currently operating data centers are located in blue states, 66% of planned data centers are in red states.

Excluding Virginia, the nation's leader in data center capacity, 92% of the planned build-out is in red states, Rattner noted.

The opposition among voters, however, is more bipartisan.

"Both Republicans and Democrats are worried about data centers," West said.

Molly Moorhead is economics editor for Yahoo Finance.