Texas Gov. Greg Abbott is signaling a significant shift in the state's approach to artificial intelligence infrastructure, calling for an end to data center development in rural Texas neighborhoods and the elimination of tax incentives that have helped fuel the industry's rapid expansion.
Speaking Tuesday at a property tax event in Bullard alongside state Reps. Cody Harris and Daniel Alders and state Sen. Bryan Hughes, Abbott used the gathering to address growing concerns over the impact of AI data centers on rural communities before turning to the event's primary focus of property taxes.
"Before I talk about property taxes, let me talk about something else that I'm fighting for that dovetails right into fighting for East Texas values, and that is pushing back against these AI data centers that are trying to build in our neighborhoods," Abbott told attendees.
The governor pointed to recent directives he has issued concerning data center development, saying companies should be required to finance their own infrastructure rather than relying on taxpayers or existing utility customers.
"I've made it clear already," Abbott said, "they're going to bring their own money, they're going to bring their own power, reuse their own water, and do it in a way that reduces the cost of electricity for residents across our state."
Abbott then proposed what would represent one of the state's strongest restrictions on the rapidly growing industry.
He called for prohibiting data centers from being built in "rural Texas neighborhoods" and argued that companies should no longer receive tax incentives for their projects.
"We must eliminate the tax breaks they are getting — they must be responsible for funding their own projects here in Texas," he said.
The governor concluded with a promise that the changes would become law, stating, "We will get that done."
Building on Earlier Regulatory Push
Abbott's remarks expand upon a June 10 letter he sent to the Public Utility Commission of Texas and Electric Reliability Council of Texas outlining his vision for tighter oversight of large electricity users.
In that letter, Abbott praised Texas' economic success, saying it had made the state a magnet for new development, but argued that data centers should not shift the financial burden of their massive electricity demands onto residential consumers.
The governor acknowledged that Senate Bill 6 strengthened planning, review, and grid interconnection standards for large-load customers seeking to connect to the electric grid. However, he argued the legislation did not go far enough and pledged to pursue additional reforms during the next legislative session beginning in January.
His Bullard comments move beyond regulatory oversight by proposing location-based restrictions that would prevent many new facilities from being built in rural areas, where inexpensive land and local tax incentives have made communities attractive destinations for developers.
Rural Communities Face Growing Pressure
The proposal comes as many rural counties have struggled to respond to the influx of large-scale AI data center projects. Unlike cities, counties generally possess limited regulatory authority over development, leaving many local officials with few tools to influence projects that can dramatically alter their communities.
While water consumption has often dominated public discussion surrounding AI facilities, Abbott focused primarily on electricity demand and its potential impact on household power bills, arguing that future projects should generate their own power and avoid placing additional strain on the state's electric grid.
Evolving Position on AI Growth
Abbott's latest comments also mark a notable evolution from his previous support for AI-related investments.
Texas has aggressively recruited semiconductor manufacturing and AI infrastructure in recent years. Semiconductor plants produce the advanced computer chips that power AI data centers, and state leaders have frequently promoted those investments as critical to maintaining American technological leadership.
Last year, Abbott celebrated Google's $40 million AI data center infrastructure investment, declaring, "We must ensure that America remains at the forefront of the AI revolution, and Texas is the place where that can happen."
Supporters of continued AI expansion often point to economic development and national security benefits, arguing that increasing domestic chip production and AI capacity reduces dependence on foreign suppliers while strengthening U.S. competitiveness.
However, concerns about the industry's growing demands on electricity infrastructure, water resources, and rural land have generated increasing opposition among Texas residents.
Poll Shows Growing Public Opposition
New polling suggests public sentiment has shifted alongside the governor's changing rhetoric.
According to a recent survey by the Texas Politics Project, 56 percent of Texas voters oppose the construction of AI data centers in their own communities, while 29 percent support new developments.
Opposition spans political affiliations, although the intensity varies. The poll found 71 percent of Democratic voters oppose local data center construction, along with 62 percent of independents and 44 percent of Republicans. Support was strongest among Republicans at 42 percent, compared to just 15 percent of Democrats.
Geographically, resistance was greatest in rural and suburban communities, where many proposed projects are planned. Among rural respondents, 62 percent opposed new data center construction in their communities, while only 22 percent expressed support.
