Illinois Governor JB Pritzker has directed the state Department of Commerce and Economic Opportunity to pause processing applications for data center tax breaks starting July 1, after lawmakers failed to advance legislation reining in developments that power the artificial intelligence industry and drive up energy costs for residents.
The executive action follows Pritzker’s State of the State address earlier this year, in which he called on the Illinois General Assembly to impose a two-year pause on tax incentives for data center projects. Those projects have become increasingly unpopular due to the vast amounts of electricity and water they consume from neighboring communities, pushing up household energy bills. State legislation addressing the issue stalled before lawmakers adjourned for the summer.
Pritzker reiterated his call for lawmakers to act during the fall veto session, outlining a seven-point regulatory framework that includes a higher electricity rate class for data centers, an extended pause on tax breaks, and environmental protections. “Illinois has an opportunity to continue leading in technological innovation and economic growth, but we also have a responsibility to protect working families and local communities as the data center industry rapidly expands,” Pritzker said in a statement.
Public sentiment has shifted broadly against data centers, once viewed as promising economic engines. About 70% of respondents to a March Gallup poll said they were opposed to data centers in their area. In Illinois, the Illinois Clean Jobs Coalition applauded Pritzker’s action, calling it the solution “Illinoisans — and this moment — are demanding.”
However, business leaders pushed back. Mark Denzler, president of the Illinois Manufacturers’ Association, warned that the pause threatens ongoing investment in Illinois. “Data centers are key to a modern economy, making cloud computing, artificial intelligence, analytics and advanced manufacturing possible,” Denzler said. Consumer advocacy group Illinois PIRG offered tempered support, with director Abe Scarr noting that “the devil is in the details” regarding implementation.
ComEd customers in the Chicago area are already facing at least a 12% increase in monthly electric charges starting in June, driven in part by surging energy demand from AI data centers being built across northern Illinois, where roughly 100 data center projects have been proposed.
