Texans rally at Capitol, push for special session on data center oversight

AUSTIN, Texas (KLTV) — Texans rallied at the State Capitol today, urging Gov. Greg Abbott to call a special legislative session and strengthen oversight of data centers, as the Senate Finance Committee held a public hearing on the state’s growing tax incentive program.

Chanting “special session now,” demonstrators gathered outside the Capitol to voice concerns about how and where data centers are being built particularly in rural areas where residents worry about impacts on water, agriculture and local infrastructure.

“Our state, our citizens deserve complete transparency and full disclosure when it comes to these data centers, and what they’re funding,” said Sid Miller, Commissioner of Agriculture of Texas.

Some East Texans joined the crowd, including Stacey Farmer of Henderson County. Farmer said a data center had been proposed about a half mile from her home. Although the company behind that project backed out last week, she said the broader fight continues.

“These data centers are coming in unleashed with exponential growth,” Farmer said.

At the center of the debate is a 2013 law that allows the state to waive sales taxes for qualifying data centers, including purchases such as electricity, servers, cooling systems and generators. The cost of that incentive has ballooned — from $14.6 million in 2014 to a projected $3.3 billion in just two to three years.

Inside the Capitol, lawmakers on the Senate Finance Committee reviewed those rising costs and questioned whether the state’s vetting process is strict enough before approving millions in tax breaks.

“What happens inside the operation of the comptroller’s office? Is it just check, We trust them, check, Go down the list, check, And here you go?,” said Senator Lois Kolkhorst.

State officials told the committee Texas currently has 335 data centers. Another 138 are applying for the incentive, 20 verifications are underway, and six applications have failed to meet standards.

Representatives from the Data Center Coalition attended the hearing and advocated for the industry, while lawmakers also heard concerns that data centers can be built with limited regulation regarding location a growing issue as drought conditions worsen across much of the state.

“Building in those areas where we don’t have enough water to supply our farmers, our ranchers, our families,” Senator Juan Hinojosa said, raising concerns about water availability and local input. A response during the hearing indicated permitting and siting rules are decisions lawmakers could consider in the next session.

After several hours, the committee opened the floor for public comment. Rural Texas advocate Roger Browning presented a stack of signed petitions, saying the issue has mobilized voters across the state.

“These signatures right here are voters. 8,000 of them,” Browning said.

The next regular legislative session begins in January 2027, when lawmakers could take up bills aimed at regulating data centers and revisiting the state tax incentive program.