Even the Knicks can’t distract New York politicians from trying to throttle economic growth.
The legislature passed a one-year ban on data center construction last week, becoming the latest state to cave to backlash against artificial intelligence. The pause would halt permits for any data centers over 20 megawatts, throwing 28 projects in limbo.
Moratoriums are a move in the wrong direction. Data centers power the AI revolution and give America an edge in its technological race against China. America cannot take for granted its lead in computational power, which is what the bill does.
Gov. Kathy Hochul (D), up for reelection, hasn’t decided what to do. The measure on her desk is saddled with an assortment of regulations that would continue after the moratorium expires, including renewable energy mandates and provisions requiring construction to use unionized labor.
Hochul has previously been skeptical of statewide permitting restrictions, saying those decisions should be made at the local level. If she signs the bill, it would become the first statewide data center ban in the nation.
It probably wouldn’t be the last. Maine’s legislature passed an 18-month ban in April. Gov. Janet Mills (D) vetoed the bill, explaining that it would block the revival of a town where a shuttered paper mill is going to be replaced by a data center.
Other states have taken more modest steps to slow the AI infrastructure buildout. Illinois Gov. JB Pritzker (D) temporarily halted tax breaks last Friday for data center construction. But Pritzker’s move is motivated more by progressive clamoring against data centers than principled opposition.
Ohio Gov. Mike DeWine (R) announced a similar pause last month, and the Virginia legislature is fighting over whether to end promised incentives eight years earlier than planned.
These finger-in-the-wind politicians are following, not leading. Last year, only 26 percent of Americans opposed data center construction locally. That number has risen to 71 percent, according to Gallup polling conducted in March. In Monterey Park, California, a supermajority of voters backed a ballot measure last week that permanently bans data center construction. Nearly 70 such moratoriums are now in place nationwide.
This pushback risks real economic consequences. A JPMorgan Chase analysis last month warned that more than 60 percent of data center capacity planned for next year isn’t even under construction. Another 7 percent of projects are delayed.
Powering data centers remains a bottleneck, but so does permitting. Laws limiting construction will make the problem worse, which could have downstream effects on the economy. Fresh off a strong jobs report, it’s bizarre that so many state and local governments are trying to kneecap the country’s fastest-growing industry.
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