The rapid proliferation of data centers in Texas has become a major wedge issue ahead of the 2026 midterm elections, potentially enabling Democrats to win statewide for the first time since 1994. The issue is central to the gubernatorial race between Republican incumbent Greg Abbott and Democratic challenger Gina Hinojosa, and the Senate race featuring GOP Attorney General Ken Paxton and Democrat James Talarico. A Texas Politics Project poll in August indicated 57% of Texas voters oppose a data center in their community, including 43% of Republicans and 60% of rural voters, highlighting broad, bipartisan opposition.
Texas, historically a conservative, pro-business state with abundant land, has attracted numerous tech companies and data center developments, with projections suggesting it could surpass Virginia as the largest global data center market by 2030. However, public sentiment has soured due to concerns that these facilities raise electricity and water bills, create light pollution, and do not generate sufficient tax revenue or jobs to justify incentives. Critics also point to a projected $3.2 billion loss in state tax revenue over the next two years due to sales tax exemptions for data centers.
Democratic candidates are capitalizing on this backlash. James Talarico is advocating for federal requirements to protect the grid and environment, repealing the state's data center sales tax exemption, and empowering local communities to approve or reject developments. Gina Hinojosa has called for a moratorium on data centers and proposed requirements for union labor and transparency regarding water and energy usage. Governor Abbott, who initially supported the industry, has shifted his stance, directing a halt on permits and proposing a regulatory scheme that includes repealing the sales tax exemption and requiring new facilities to generate their own power.
The widespread opposition to data centers, cutting across party lines, makes it a potent issue that could dramatically impact the 2026 midterm elections. If pro-data center candidates suffer losses, it could encourage more moratoriums and audits, potentially slowing AI investment and affecting the business models of major tech firms that have invested hundreds of billions in AI development, assuming rapid growth rates.
