DeSantis has better policy than rhetoric on data centers

Gov. DeSantis’s recent disparaging comments about data centers have left some in the media comparing him to Bernie Sanders, but luckily for Floridians the similarities aren’t much beyond hot air.

While Sanders has called for a moratorium on the building of new hyperscale data centers, DeSantis is backing legislation as part of his AI Bill of Rights that encourages data center development in the state while addressing major public concerns like electricity bills and transparency.

Florida’s SB 484 puts into place much of what DeSantis called for in the data center proposal packaged as part of his AI Bill of Rights, including provisions that protect Florida households from higher electricity bills and require companies building data centers to pay their own way when adding capacity and infrastructure to the grid. 

DeSantis presents his positions on data centers as a bold stand against big tech, but SB 484 has much in common with recent proposals from Pennsylvania’s Democrat Gov. Josh Shapiro. Shapiro more accurately describes such initiatives as a moderate course that imposes certain regulations while maintaining a friendly overall climate for new data center construction.

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Data centers go through the same state and local approval processes as any other new commercial or industrial development. Large data centers typically support more than 1,000 construction jobs during the 18 to 24 months they take to build, and more permanently more than 100 jobs in IT and facilities management that pay higher than national averages. 

They also provide a significant boost to local tax revenues. Florida already has 120 data centers, the fourth most of any state. Most of them are small, but plans are underway for multibillion dollar facilities in Palm Beach and St. Lucie counties. 

Fears about data centers using up all of our electricity and water are simply overblown. Data centers accounted for 4.4% of the country’s electricity demand in 2023. That’s expected to grow to 7% to 12% by 2028 as part of the AI-driven construction boom. 

These numbers are significant but far from overwhelming. Electricity used by data centers remains a tiny fraction of that used in manufacturing, for example, and efforts to reshore or bring back foreign manufacturing to the U.S. will result in much more new demand than data centers. At a national level we’re expected to add more than enough capacity to meet these new sources of demand.

At a local level, new demand from large users such as data centers raises more valid concerns, but these are precisely the questions Florida’s SB 484 looks to address. Planned additions to generating capacity take time, and large new users can put strains on local grids that at moments of peak demand can lead to problems with service or higher rates. That’s why Florida is joining states around the country in designing pricing models for large load users of electricity that protect small ratepayers from these risks and stipulate that they agree to pay their share of the costs to add capacity.

As in other states, the AI Bill of Rights and SB 484 leave the specifics of pricing for large users to the public utilities to negotiate. The Senate bill also reflects DeSantis in preserving the right of local authorities to maintain control over negotiations with data center developers and under many conditions refuse them if they choose. 

For the most part, this reflects how new commercial and industrial developments are usually negotiated. The danger with controversial issues such as AI and data centers is for local proceedings to fall into the hands of overzealous groups looking to prevent all development in their backyards.

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A good rule of thumb for both state and local authorities is to treat data centers the same as other large new industrial or commercial projects, rather than singling them out for special treatment whether good or bad.

DeSantis’s AI Bill of Rights proclaims, “No taxpayer subsidies for Big Tech.” While it isn’t entirely clear what this means (SB 484 says nothing on taxes), states often offer tax credits to incentivize many kinds of new building projects. Florida shouldn’t pile on tax breaks for data centers, but it also shouldn’t withdraw incentives or raise regular rates for just one type of business.

The same goes for measures on transparency. Some recent data center projects in Wisconsin drew criticism after it was revealed that local officials signed non-disclosure agreements with Meta and Microsoft keeping many details away from the public’s eye. SB 484 duly prohibits these types of long-term non-disclosure agreements. 

But agreements about how and when major new commercial or manufacturing developments are announced are not unique to data centers or big tech. Sen. Bryan Avila, R-Miami-Dade and sponsor of SB 484, is attempting to strike a balance between the public’s legitimate right to know about major new developments and confidentiality concerns by carving out more limited public records exemptions of a year or less in a separate piece of legislation (SB 1118).

DeSantis is eager to be seen as a crusader against data centers, but the major piece of legislation on data centers connected to his AI Bill of Rights enables building to continue while addressing major concerns like the cost of electricity. 

Even if just a war of words, the governor does Floridians a disservice by stoking fears on AI and confusing many of the issues that Florida and other states are doing promising work to resolve.

Max Gulker is managing director of technology policy, and Adrian Moore is vice president at Reason Foundation.