Texas Data Centers Face a Bipartisan Bill Stack: SB 293 Would Repeal Their Sales-Tax Exemption — and 23 of 31 Senators Have Signed On
The industry's Texas welcome mat is being rolled up from both parties. SB 293, by Houston Republican Sen. Joan Huffman, would repeal the state sales tax exemption for data centers and already carries 23 of the Senate's 31 members; HB 167 makes the same repeal in the House, and Sen. Judith Zaffirini's SB 33 and SB 36 would bill the centers for transmission and bar them from state and local incentives — all before the January 12 session opens.
AUSTIN — Data centers are set to face tougher headwinds in Texas under Governor-elect Gina Hinojosa, as Republicans and Democrats have filed bills ahead of the 90th legislative session that would regulate an industry North Texas knows well — the Metroplex is one of the state's data center corridors, and its power and water questions land here first.
The bill getting the most attention is SB 293, filed by Houston Republican state Sen. Joan Huffman: it would repeal the state sales tax exemption for data centers, and 23 of the Senate's 31 members and members-elect have signed on. San Antonio Democrat state Rep. Martinez Fischer filed the House twin, HB 167, with one difference that matters to projects already built — certified centers would keep their exemptions until the authorized period expires under the House bill, while the Senate bill would end exemptions as soon as it becomes law, if passed as is.
Sen. Judith Zaffirini, a Laredo Democrat, filed two more: SB 33 would require data centers to cover the transmission costs from their energy usage, and SB 36 would restrict computational facilities such as data centers from receiving state and local tax breaks and economic development incentives. The politics underneath are measurable: a University of Texas/Texas Politics Project poll released June 24 found 56% of Texas registered voters oppose data centers in their communities, 42% strongly, over power, water and utility-bill concerns — and Brownsville has already adopted a 90-day moratorium that took effect November 5.
The incoming governor is aligned with the push. Hinojosa told CNN on November 5 that the state is done with data centers unless the companies behind them prove they will benefit Texans: "It is not that I hate data centers. I hate the way they are taking advantage of Texas, and that stops when I'm governor." Outgoing Gov. Greg Abbott spent his final months moving the same direction — pausing new construction August 3 for a grid audit and ordering the Texas Commission on Environmental Quality on September 21 to stop issuing data center permits until ERCOT completes it. The session convenes January 12; the exemption fight is already filed.
