Data centers are asking communities to trust the math.
Microsoft has spent the year telling communities that new data centers will make it a “good neighbor,” sending liaisons to learn what residents need. Yet Microsoft representatives have seemed unprepared when questions move beyond the company’s campaign materials, particularly questions about taxes, public services, water, electricity, and long-term costs.
Microsoft’s own public-facing documents acknowledge that matching employee donations is not enough. Employees donated $229 million across 29,000 nonprofits in 2024, but the company will approve only a series of one-time nonprofit donations totaling up to $1 million for the community around the Granger data center.
That gap matters because data center incentives can last far longer than a charitable check. In Georgia, a recent audit found that the state “gave up $474 million in sales taxes in one year—and got back just $41 million from the industry.” Indiana lets large firms such as Microsoft buy data center equipment without paying the state’s 7 percent sales tax, and that exemption could cover as much as $13.2 billion in projected equipment purchases.
Without the Indiana exemption, up to $900 million could have entered the tax base supporting state programs, Indy Mirror estimated. The exemption can last for 50 years, while a property tax savings bill passed last year weakened local governments’ ability to raise money for community services. Fifty years is a long time to call a tax break temporary.
California demands better answers
California is taking a different approach. Gov. Gavin Newsom signed a slate of bills on Monday that could give communities better data—and more say—over how data centers affect electricity bills and water supplies.
Starting next year, operators must share some details about water and electricity use. Senate Bill 886, Assembly Bill 2383, and Senate Bill 1168 direct the California Public Utilities Commission to create separate power rates for data centers, while AB 2383 also pushes operators toward more renewable energy.
Assembly Bill 1577 requires monthly reporting on energy consumption. AB 2619 and AB 2469 require water disclosures, with AB 2469 making operators responsible for infrastructure upgrade costs; AB 2619 and AB 2469, however, require those disclosures only when companies apply for permits or business licenses, not every year.
Senate Bill 887 eliminates categorical exemptions from the California Environmental Quality Act for data centers. That change addresses a public information problem: Santa Clara University researchers contacted every water provider in districts housing data centers and found that providers refused to share water-use data because of privacy regulations, while very few California data centers had environmental impact reports available to the public.
“It’s extremely frustrating to try to understand basic information,” said Mark Specht of the Union of Concerned Scientists. Iris Stewart-Frey, a professor of environmental science, called the laws “in many ways a step in the right direction,” saying they signal that people and lawmakers are paying attention.
The electricity problem is not staying local
The stakes extend beyond community budgets. Data centers are projected to consume more than 5 percent of global electricity demand by 2035, tripling their current needs, and most new and existing natural gas plants will meet that added demand.
That buildout could raise power-sector emissions by 6 percent in less than 10 years. A separate analysis of 99 proposed on-site gas power plants found they could increase US power-sector emissions by 20 to 33 percent if every project is built.
At a post-lunchtime Climate Week panel featuring technology executives, protesters from Extinction Rebellion NYC interrupted the discussion multiple times. One protester shouted, “The idea that we can keep running on fracked gas is a lie!” Cully Cavness, cofounder and president of Crusoe, said he was still thinking about the protest several minutes after security removed the last protester.
Varun Sivaram of Emerald AI warned that depriving communities of data centers could keep them from benefiting from grid transformation efforts. His response to the broader backlash was concise: “Careful what you wish for.” Polls show climate ranks among the last data center-related environmental concerns for many voters, behind water, energy use, and local air and noise pollution.
The political response is widening. US Sen. Bernie Sanders, an independent from Vermont, has introduced a plan for a national “sovereign wealth fund” that would force AI firms to donate as much as $7 trillion, while William Lawrence, a candidate for Michigan’s 7th congressional district, has made opposition to AI and data centers part of his platform.
Companies can call themselves good neighbors, but communities need more than liaisons, donations, and polished campaign language. They need public numbers, durable revenue, and a clear account of who pays when the servers arrive.
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