Illinois Governor JB Pritzker has issued an executive order halting state tax incentives for data centers, a move that aligns Illinois with Ohio in re-evaluating the economic impact of these energy-intensive facilities. The decision, announced on Friday, follows the state legislature’s failure to advance the governor’s proposal aimed at preventing data center energy consumption from inflating local residents’ utility bills.
Governor Pritzker, a Democrat currently seeking his third term, explicitly stated that his order was a direct response to the legislature’s inaction. In February, he had urged lawmakers to consider raising electricity rates for data centers, citing their substantial energy usage. Pritzker plans to reintroduce the issue during the upcoming veto session scheduled for mid-November.
‘Data centers are asking just too much for too little in return, whether it’s electricity or clean water,’ Pritzker articulated in a video shared on X. He emphasized the critical need to protect consumers, stating, ‘We can’t let them cause our utility bills to go up.’
The Illinois governor’s directive comes shortly after Ohio Governor Mike DeWine ordered a similar pause on tax incentives for data centers in his state on Wednesday. Ohio’s halt is intended to allow a committee to thoroughly study the economic ramifications of such development projects, indicating a broader regional re-assessment of these facilities.
Growing Opposition and Economic Repercussions
Pritzker’s order also reflects a growing national sentiment of opposition to data center developments. Industry researcher Data Center Watch reports that development projects totaling approximately $64 billion across the United States have been either delayed or canceled due to community pushback. This resistance often stems from local residents’ concerns regarding increased demands on water and energy resources.
A notable example occurred in January when the city council in Naperville, Illinois, a Chicago suburb, voted down plans for a proposed data center. Residents in Naperville had voiced significant fears that the project would lead to higher water and energy costs, mirroring the very concerns Pritzker has now highlighted at the state level.
Labor Union Disagreement and Investment Concerns
The governor’s decision, however, places him in opposition to a key Democratic constituency: organized labor. Unions have historically advocated for the continuation of tax breaks, viewing them as crucial for generating construction jobs for their members involved in building these large-scale facilities. Climate Jobs Illinois, an umbrella organization representing 15 unions, issued a strong statement on Friday urging Pritzker to reverse his pause.
‘This pause does nothing to lower utility bills, protect the grid, or advance clean energy,’ the group asserted in its statement. They further warned of significant economic displacement, claiming the move ‘will send billions of dollars in investment and thousands of union jobs to Indiana, Kentucky, and Ohio — states that sit on the same electrical grid, where those data centers will be built anyway, just without Illinois workers.’
Despite the pause, Pritzker’s order is not retroactive; it will not impact agreements that were entered into before July 1. Furthermore, companies retain the ability to seek local tax relief support. Data from the state’s Department of Commerce and Economic Opportunity indicates that Illinois provided nearly $1 billion in state tax incentives to data centers between 2020 and 2024. During this period, the state attracted more than $15 billion in investments from data center projects, underscoring the significant financial stakes involved in these policy shifts.
The pause in Illinois, following Ohio’s lead, signals a critical re-evaluation of the balance between economic development, energy demands, and residential utility costs in the rapidly expanding data center industry. With Governor Pritzker committed to pushing the issue further in the legislative veto session, the future of data center incentives in Illinois remains a focal point for both industry stakeholders and local communities.
