(The Center Square) – Republican state senators are backtracking on their previous support for giving billions of dollars in tax breaks to data centers, which provided incentives for rapid data center expansion now causing backlash among voters.

“What we thought we were voting for back in 2013, it’s a much different animal these days,” Texas Senate Finance Committee Chair Sen. Joan Huffman, R-Houston, said. The committee held a hearing to address several interim charges, including a 2013 law, and subsequent laws, authorizing billions in tax breaks for data centers she voted for.

The first enacted bill, HB 1223, created a “temporary exemption” for qualified data centers from paying sales tax on property and equipment. In 2015, during Abbott’s first year in office, he signed HB 2712 into law extending tax breaks to data centers. Last year, Abbott also signed SB 6 into law expanding AI data center development.

Huffman said she would be filing a bill to amend state law related to data centers.

During the 2014–2015 budget cycle, data centers were exempted from paying $14.6 million in taxes, according to the committee’s hearing notice. Texas is expected to lose $3.3 billion in data center tax revenue over the next two years, the committee said.

State Sen. Paul Bettencourt said there are 335 data centers operating across Texas. That’s more than double than the 140 currently being built, The Center Square reported.

“The industry has grown far faster than anyone expected” more than a decade ago, Bettencourt said. “The [tax] exemption helped attract this industry. Now the cost to taxpayers has grown into the billions, and it’s our job to take a hard look at whether the benefits still justify the costs.”

Bettencourt said the data center expansion began during the COVID-19 lockdown era when more people were working from home and the “demand for data usage at home exploded.” He also said the public should know that “data services are already everywhere in Texas.”

He also said it was important to ensure the safety of data centers and they’re a “national security imperative.” Data centers are “physical: servers and storage in real buildings… That’s why data center physical security matters just as much as cybersecurity.”

State Rep. Gina Hinajosa, D-Austin, who is running for governor challenging Gov. Greg Abbott, blamed the governor for the current data expansion. Abbott “waived all sales tax for data centers in Texas – creating the largest taxpayer giveaway in the country,” she said.

She posted a copy of his signature on the 2015 bill stating, “here is his signature on the bill that waived all their sales tax. A bill he has the sole power to undue today if he signed an executive order or called a special session to fix the mess he made.”

Multiple groups have called on Abbott to call a special session to ban data centers.

Abbott has called on the legislature to eliminate data center tax breaks and issued directives for regulatory oversight, The Center Square reported. At a recent campaign event in east Texas, he said he now opposes data centers being built “in rural Texas neighborhoods.”

Rural Texas leaders have said Abbott and other Republicans are losing conservative votes because they advanced a $1 billion \school choice program and for more than a decade supported data center tax breaks, saying they will “down vote” in November.

Former state legislative staffer and rural Texas advocate Suzanne Bellsnyder said, “between vouchers and data centers” Republican leaders in Texas “have moved from ignoring rural Texas to now attacking our way of life. The Republicans CANNOT win without Rural Voters. There are hundreds of thousands of people in these anti-data center groups. In 2018, Ted Cruz only won by 219,000 votes statewide.”

Former state Rep. Glenn Rogers, R-Graford, also issued a similar warning earlier this year when explaining why rural Texans opposed the school choice program, The Center Square reported.

According to a new Texas Public Opinion Research poll, Abbott leads Hinajosa by three points, 45% to 42%, with 10% still undecided and a margin of error of 3.4%.

According to Cushman & Wakefield’s 2026 Global Data Center Market Comparison report, for the first time this year, “Dallas ranked as the No. 1 primary data center market in the world. Austin-San Antonio and West Texas led the secondary and tertiary market rankings, underscoring Texas’ growing importance as a large-scale AI infrastructure hub.”

Texas is “one of the industry’s fastest growing and most scalable regions as large-scale data center development activity expands into numerous parts of the state. … West Texas is a rapidly growing AI infrastructure hub, with 2.9GW currently under construction, exceeding the entire amount of capacity underway across the EMEA region,” it adds.