Texans are getting more skeptical of data centers and that matters for school funding.

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A new University of Texas at Austin poll shows what communities have already been saying in public meetings, local fights, and zoning debates: Texans are increasingly skeptical of data centers being built in their backyards. According to the poll, 56% of registered voters oppose the construction of a data center in their community, while only 29% support it. Opposition is even higher in rural areas, where 62% of voters said they oppose local data center construction.

That pushback isn’t coming out of nowhere. Data centers, especially the massive facilities built to power AI technology, consume enormous amounts of electricity and water, require major infrastructure upgrades, and create far fewer permanent jobs than the size of the investment might suggest. For public schools, though, one of the biggest issues is the one that often gets buried under the “economic development” pitch: tax revenue.

Texas has spent years trying to attract data centers through tax incentives, and the cost is growing quickly. A recent Texas Tribune investigation found that Texas is giving data centers more than $1 billion in tax breaks each year, with the state expected to lose out on $3.2 billion in sales tax revenue over the next two years because of exemptions for the industry. That matters for schools because state revenue helps fund public education, and when lawmakers carve out increasingly expensive exemptions for major corporations, those lost dollars are not hitting the budget where they could help cash-strapped districts.

The property tax side raises another set of concerns. Texas’ Jobs, Energy, Technology and Innovation (JETI) Act, allows companies, school districts, and the governor’s office to enter into agreements that limit the appraised value of eligible property for school district maintenance and operations taxes for 10 years. In plain English, that means a company can build a massive project, but the taxable value used for school funding can be artificially reduced for a decade. The Texas Comptroller describes JETI as a program for large capital investments, and the process requires approval from both the governor’s office and the school district. But for communities, the question is still whether the long-term benefits outweigh the short-term revenue being given up. 

We are seeing data center fallout affect schools in other states. In Oregon, a study found that business property tax breaks cost schools $275 million last year, with data center deals helping drive the increase. While Oregon isn’t Texas, and the school finance systems are different, the warning is still useful: once data center incentives become a routine part of economic development, schools can end up paying the price through reduced public revenue.

Texas communities are asking hard and necessary questions. In Brazoria County, officials rejected tax abatements for a proposed $3 billion AI data center and power plant project after residents raised concerns about noise, property values, water use, and the limited number of permanent jobs. The project may still move forward, but the county’s decision shows that local officials aren’t always willing to hand over tax breaks just because a company promises a big investment number.

For school districts, this is where the issue becomes especially important. Texas schools are already navigating budget shortfalls, staffing shortages, rising insurance costs, and debates over closures and consolidation. When a data center comes to town, local leaders may see a chance to expand the tax base, but if the deal includes major abatements or value limitations, the benefit to schools may be delayed, reduced, or less certain than advertised. 

Every data center proposal needs serious scrutiny, especially when public education revenue is on the line. Tax incentives shouldn’t be treated as automatic, and local voters should know how much revenue is being waived, how many jobs are actually being created, how much water and power the facility will use, and what protections exist for schools if promised benefits don’t materialize.

This new polling suggests that Texans are already uneasy. For public school advocates, the next step is making sure that concern includes the fiscal impact on classrooms, because when corporations get long-term tax breaks and schools are left fighting over scarce dollars, the cost of “economic development” doesn't stay abstract for long.