The rise of AI is reshaping demand for computing power, and data centers are popping up nationwide. This piece argues from a Republican perspective that taxpayer-funded incentives are the wrong lever to attract data center projects, and that energy abundance, regulatory certainty, and speed-to-operation matter far more to these firms.
AI-driven computing needs huge amounts of reliable electricity, and big tech firms are racing to secure capacity quickly. Many companies seeking new sites are less constrained by capital than by the ability to get power online fast and predictably. When time equals money, slow permitting, uncertain interconnections, and patchy generation capacity cost more than typical local tax breaks.
States and cities routinely offer subsidies or tax exemptions to lure projects, but that practice deserves fresh skepticism. Subsidies shift costs to taxpayers while blunting the natural incentives that would encourage communities to improve infrastructure and streamline approvals. For communities that accept giveaways, the upside in property tax revenue and public service funding often never materializes in the way boosters promise.
Some major tech firms have signaled their priorities clearly by indicating a willingness to “sign a pledge” to supply and pay for their own power for AI data centers. That willingness speaks volumes: these companies want control over energy in order to guarantee uptime and predictable pricing. If they will shoulder the cost of generation, local governments should stop reflexively offering cash incentives and instead remove regulatory hurdles that slow projects down.
Local officials should focus on creating stable, predictable permitting and a straightforward interconnection process. Speed-to-operation is the value proposition these developers seek, so zoning clarity and efficient review timelines matter more than a one-time tax break. Communities that can provide a clean, fast pathway to build will attract investment without sacrificing their tax base.
At the state level, policy must aim at reliable, abundant energy and smarter rules that let markets deliver power where it is needed. One promising option is Consumer Regulated Electricity, known as CRE, which would let private providers build generation for large, energy-intensive customers outside the permission-heavy grid framework. CRE could offer data center operators an option to partner with private generators to secure dedicated capacity.
Proponents argue CRE creates a “parallel path” to energy abundance by allowing sophisticated customers to finance their own supply. Under this model, the burden of building and operating extra capacity falls to those who demand it, rather than being socialized across all utility customers. That arrangement aligns costs with benefits and reduces political friction over who pays for upgraded infrastructure.
CRE and similar reforms also reduce regulatory uncertainty that scares off projects. When companies can plan around clear rules and predictable timelines, they can make investment decisions faster and with less risk. A policy environment that rewards speed and clarity attracts firms that want to build and operate at scale without asking taxpayers to underwrite their bottom line.
Missouri and other states should consider enabling private delivery models for high-demand users and streamlining approvals for major infrastructure projects. Regulatory reform that encourages private capital to supply targeted generation creates real competition and innovation in the electricity sector. That competition, in turn, delivers the dependable power data centers require while protecting taxpayers from open-ended subsidy commitments.
Municipalities must also resist the temptation to chase headline-grabbing announcements with generous payouts. Incentivizing projects with public dollars can create perverse incentives and weaken residents’ trust in government stewardship. By prioritizing transparent permitting, reliable siting options, and partnerships that secure private power, cities preserve public resources and still remain competitive.
Federal momentum around reforms shows this is not just a local debate; lawmakers are taking notice with proposals aimed at unlocking energy for AI infrastructure. Policies that let private actors build and connect generation more readily would meet the market where it already is headed—toward firms that will pay for their own electricity when it guarantees access and reliability. Smart policy recognizes that energy and certainty, not subsidies, are the real ticket to attracting AI-era investment.
Data centers are valuable economic assets when a community captures the upside without forfeiting long-term fiscal health. The right mix of regulatory reform, private-sector partnerships for energy, and expedited, predictable permitting will draw investment without handing out taxpayer dollars. That approach treats taxpayers and developers fairly and positions states to compete on substance rather than on giveaways.
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