Arizona Technology Council Chief Argues Against Data Center Moratorium

Arizona's data center industry has drawn a two-front challenge from state officials, and the head of the Arizona Technology Council is asking lawmakers to reject a blanket pause on new projects. Governor Katie Hobbs signed a three-year suspension of sales tax exemptions for new data centers into the FY2027 budget in June. Attorney General Kris Mayes called for a statewide moratorium on new development two months later.

Steven Zylstra, president and chief executive of the Arizona Technology Council, wrote in commentary published October 30 that development should respond to community concerns without halting it. He said the industry's economic record and the infrastructure's role in daily services weigh against a moratorium. Data centers store, process and transmit information behind telehealth visits, government records, online banking, photo sharing and streaming.

Zylstra pointed to investment figures for the year ending in June 2026, when Arizona drew more than $109 billion in commitments. He cited Meta's spending on workforce training and on higher education costs for Arizona residents. Since the state enacted a data center tax incentive in 2013, he wrote, the sector has grown to more than 20,000 direct jobs and nearly 88,000 total positions. Every data center job supports six additional jobs in construction, engineering, local services and trades, he said. The industry produced more than $1 billion in state and local taxes in 2024.

Communities have raised questions about energy use, water consumption and environmental effects of these projects. Zylstra said data center water use accounted for one-tenth of 1% of Arizona's annual consumption in 2025, and pointed to closed-loop cooling systems that cut on-site water use. He wrote that developers, local governments and communities have refined standards as new investment has continued to arrive.

He proposed that communities review proposed data centers one at a time and approve those that meet standards for water use, energy efficiency and sustainable management practices. Zylstra wrote that Arizona has attracted billions of dollars in data center investment over the past decade, and that a pause would hand those gains to Virginia and Georgia as those states build their own artificial intelligence economies.