Data centers emerge as key issue in Texas politics: where candidates for governor, U.S. Senate stand

Backlash against data centers has become a political buzzsaw in Texas in time for the November election. 

Rural and suburban Texans don't want data centers dotting their countryside and neighborhoods, and they worry that these facilities will consume their communities' water and electricity, leaving them paying higher bills. 

For weeks now, Democrats, including Gina Hinojosa, the candidate for governor, have called for a moratorium on building new data centers until the state legislature can vote on new protections for residents. She and other Democrats have also urged three-term incumbent Gov. Greg Abbott to bring state lawmakers back to the Texas Capitol for a special session on data centers. 

"They have all descended into our communities, into our neighborhoods, and there are no rules and people are being taken advantage of," said Hinojosa. "This is an issue that has become big in 2026, and one where the governor is to blame. I've been calling on the governor to call a special session to pass laws so that we can come in and pass laws in legislators to protect Texans because right now, those are not those protections."

Abbott has placed a pause on any new permits to build data centers, saying they will first need to pass a comprehensive audit of their water and electricity usage, their funding, and their plans to reduce impacts on noise and light pollution. 

During a news conference in Fort Worth last Thursday, Abbott told CBS News Texas that his new guardrails mean that the projects can't use the water communities need or the electricity the state's power grid needs, must lower electricity costs for residents, and can't be built in rural neighborhoods. 

He said the audits being conducted by ERCOT and the Public Utility Commission will take months. 

"Right now, it's impossible for ERCOT or the PUC to know exactly the information they need to put the pieces of the puzzle together," Abbott said. "That same information is needed by legislators before decisions can be made about the way forward. What I have done is working. The guidelines and guardrails I have established are now universally adopted across the state of Texas."

Democrat candidate James Talarico's data center plan

In the U.S. Senate race, Democrat James Talarico unveiled his plan last month. 

Under his "Hold Data Centers Accountable Plan," he would end state sales tax incentives for data centers, set minimum federal requirements for data center projects to protect the power grid, environment, and jobs and ensure transparency, and empower local communities to decide whether they want a data center in their town or city. 

Talarico said he would also protect Texas water by requiring new data centers to use a closed-loop system to reduce water consumption and lower utility costs for working Texans. 

"We can start by cracking down on these data centers across the state that are jacking up our utility bills and using up all our water. I know Abilene has been at the epicenter of this data center fight, and I want you to know that in the U.S. Senate, you will have an ally in me in the halls of power," Talarico said during a rally in Abilene earlier this month.

GOP candidate Ken Paxton unveils data center plan

On Monday, Republican Ken Paxton introduced his plan on data centers called the "Texas First Data Center Plan." 

Paxton's news release said he will co-sponsor the currently proposed Senate bill called the DATA Act. It would eliminate outdated red tape and federal regulations and create new power systems that ensure data centers do not raise electricity costs for Texas residents. 

His plan would also support Abbott's data center guardrails at the state level. That includes prohibiting the construction of AI data centers in rural Texas neighborhoods, reducing the impacts of data centers on local communities, and repealing sales tax exemptions and other incentives. 

Paxton would require data centers to fund their electricity, expand the state's electricity capacity, and use closed-loop water systems. Paxton's plan said he would file a first-of-its-kind bill prohibiting the use of Chinese technology to power data centers in the U.S. His release also said he would file a bill to protect children by holding data center companies criminally liable if the data center empowers AI chatbots to undermine their safety.

In February, Hood County requested an opinion from the Attorney General's office to determine whether it can place a moratorium on data centers. The Commissioners Court voted against a moratorium. 

According to the agency's website, the requested opinion remains pending after 180 days. 

The Texas legislature approved sales tax incentives for data centers during the 2013 session, when few were being built. Paxton was among the Republicans and Democrats who approved the bill before then-Gov. Rick Perry signed it into law. Records from the Texas Comptroller's Office show those incentives are now projected to climb to more than $3 billion during the next two years. Republicans and Democrats have said they want to eliminate this sales tax incentive during the next legislative session beginning in January. 

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