Arizona is handing its AI future to other states — one ‘No’ vote at a time

As John Adams once said, “Facts are stubborn things.” The world is changing, and AI, along with data centers that provide the necessary infrastructure for AI, are a critical piece of our economy and national defense. We will not be competitive in the world economy, nor will we be able to protect our citizens — especially from belligerent nations like China — without data centers and AI. For those who bemoan this reality, and wish to harken back to a simpler time, I can only offer my condolences. America must embrace this reality, and instead of seeing it as a problem, view it as an opportunity.

The critics of data centers fall into two camps. On the one hand, there are emotional and political attacks by political demagogues seeking to manipulate public opinion — and yes, worse yet, there is disinformation propagated by the Chinese who seek to undermine our economy and military. But there are also communities and individuals who raise legitimate questions about the impact of data centers and AI on water, the environment, jobs and the quality of life in America.

Arizona has become ground zero for this debate. While global demand for cloud computing is exploding, policymakers across Arizona’s cities and towns are making it harder to build the AI infrastructure facilities that enable Americans to access these life-changing tools. Arizona built a top-five data center market, and its mayors are now methodically dismantling it. While the Arizona Legislature spent years constructing the tax structure and permitting environment that put Arizona on the map, these mayors and council members are undoing that work one unanimous rejection at a time. Tucson turned away $3.6 billion. Chandler turned away $2.5 billion. Phoenix rewrote its zoning code after approvals were already in motion. The companies that walked away do not issue press releases about it. They just take the capital to states such as Texas and Utah, where local and state officials understand how these data centers can serve as economic drivers.

Although these politicians cite environmental and energy concerns in their protest of data center construction, in many instances, these claims grossly overstate the impact on the environment and ignore new technologies that significantly lessen the water needs for these facilities. They also fail to acknowledge that the tax revenues generated by these data centers can often mitigate many of these concerns. And while AI will change some jobs (although trades like mechanics, construction workers, and plumbers will not be affected), and some jobs will be lost, there will also be new jobs and opportunities. When automobiles were invented, farriers lost their jobs making horseshoes, but new jobs were created for auto mechanics. In short, the opponents of data centers and AI rely on a fallacy that new technology results in producing the same amount of goods with less workers. But historically, that has not been the case. Rather, new technologies have allowed America to produce more goods with the same number of workers — and in the process, generate more revenue and income for workers.

Virginia has already shown what getting this right looks like. By building a stable, predictable regulatory environment over two decades, the state turned data center investment into an economic engine that generated nearly $40 billion in output in 2025, supported more than 112,000 jobs, and delivered sustained tax revenue to state and local governments. These resources are not going to big tech — instead, they are creating jobs for electricians and pipefitters earning 25% to 30% above comparable wages, providing HVAC workers with multi-year project pipelines, and supporting local tax bases built on long-term capital investment that does not relocate when the political winds shift. Arizona had the foundation to build something comparable. With over $600 billion invested by Nvidia and TSMC to build AI chips on American soil for the first time, these companies sent a clear message early in the race: the foundation for American AI infrastructure will be built in Arizona. That foundation is now being pulled apart by officials who have convinced themselves that opposition is the same thing as oversight.

The deeper issue is not about any single project or council vote. It is about whether the United States intends to lead the infrastructure buildout behind AI and the digital economy, or whether it will regulate and delay its way into second place while China pushes ahead. As Lee Iacocca once said, “You either lead, follow, or get out of the way.” 

Nevertheless, local officials and activists seeking to arbitrarily block data center construction will say they are responsible environmental stewards, but take note — instead of providing an alternative path forward, they are simply saying no to our best path to global AI leadership. While many of these issues can be addressed, there is a point at which guardrails become a veto on land, on water rights, on grid access, and on permitting. More importantly, cities have ignored or undermined fundamental property rights by dictating how, and even whether, private property may be used for its highest and best use. At that point, the debate is no longer about responsible development. It is about whether development happens at all.

The math is not complicated. Arizona’s data center incentive costs the state $38 million a year and returns an estimated $863 million in state and local taxes, a roughly 22-to-1 ratio. Virginia runs the same playbook and gets $3.51 back for every dollar forgone. The officials dismantling Arizona’s program aren’t protecting taxpayers. They’re handing that return to Texas and other states. Or worse, forcing property owners to forego these projects altogether, which is the equivalent of handing a victory to America’s competitors. Residents who want their state at the forefront of the AI economy need to make that known, loudly, before the next unanimous “no” vote makes the choice for them.

America is a land of opportunity. No place represents that more than Arizona. And while data centers must pay attention to the input and wishes of the community, Arizonans must also recognize the importance of these facilities and try to partner with them. And most importantly, facts, and what is truly in the best interests of Arizonans, should drive our decisions on data centers — not politics or personal agendas. We owe that much to the people of Arizona.

Andrew Gould is a former Arizona Supreme Court justice and a partner at Holtzman Vogel law firm.