An effort is underway to assemble a coalition of economists, academics, utilities and technology-industry figures to develop a framework for Arizona’s data center policy.

The news follows a public disagreement over data centers last week between Attorney General Kris Mayes and Gov. Katie Hobbs— both Democrats—who favor different approaches for the growing technology industry.

On August 31, Mayes called for a statewide pause on the approval and construction of any new data center projects, urging both lawmakers and the governor to halt all plans to expand the sector until it could find a way to “manage the industry’s growth.”

She cited a series of environmental and fiscal concerns, including record energy demand, rising power bills, water constraints and neighborhood impact.

Less than a week later, Hobbs, who in July secured a three-year pause on data center tax incentives in the state budget, had a response.

“I don’t think a moratorium is the right approach. I think there are places where data centers make sense,” Hobbs told KTAR. “They’re an important part of the high-tech economy that we are growing here.”

The governor doubled down on her July tax incentive freeze during the interview, expressing satisfaction that the state now had carved out the time to craft a new policy.

And she isn’t alone. Behind the scenes, economists have been asking for a concrete plan to confront the profitable yet controversial prospects of an industry that geneated more than $2 billion in state and local revenue from 2021 through 2023, but polls at 57% unfavorable with Arizonans, higher than the 48% national unfavorable rating.

So what would a legitimate plan look like?

“The template for analyzing data centers is pretty straightforward,” said Jim Rounds, President of Rounds Consulting Group and a frequent state economic consultant. “We need an analysis of current and future demand for data processing projects.”

That analysis of demand would also likely weigh whatever financial contributions each facility provides against its ability to generate tax revenue, manage local water resources, and operate within the bounds of the existing or planned infrastructure of local utility companies.

“At the present time, I’m trying to assemble a small coalition that includes individuals from academia, the data centers, electric utilities, and some other individuals in tech to produce a map that government entities can follow,” Rounds added. “The broader business community will need to be included as well.”

According to dcmap.us, a directory which tracks and catalogues data center facilities across the United States, Arizona is now home to 113 operational data centers, with 10 now under construction and 39 planned for the future.

The scale of what companies are planning dwarfs most existing facilities.

Operational facilities account for about 2.3 gigawatts of reported power capacity. But those numbers pale against proposals for the outskirts of places like West Buckeye, Surprise, Florence, Eloy and Casa Grande. Planned projects statewide account for another 9.4 GW. That’s theoretically enough to safely power more than 2 million average U.S. homes.

Power demand is only one part of the broader policy debate. The other half covers water consumption, noise, heat and the potential increase in utility rates resulting from new energy infrastructure costs — issues that Mayes says have “sparked intense opposition” in communities not consulted by data center developers.

“We also need a better campaign to inform the public on these matters,” said Rounds. “After watching several public outreach efforts, as well as city and county meetings, the public is still using information that was descriptive of data centers from about a decade ago.”

Another expert on public opinion, Barrett Marson of Marson Media, a Phoenix based PR firm that frequently works with Arizona policy, echoes that sentiment. He argues that the state had done a “poor job” of discussing the benefits of data centers.

“The industry needs to bring a diverse group of political, business and community leaders together to discuss the benefits and the best way to mitigate the impacts,” Marson says. “One thing is clear: more data centers are needed to grow our economy and keep pace with innovation. People are reliant on technology. It’s not 1982 anymore. Just to figure out where we are going to dinner, a data center is involved.”

Experts seem to agree that emphasizing that interconnectedness between data centers and daily life may be part of the answer to addressing public dissatisfaction with the growing technology sector. Other issues, like noise and heat, may also provide new opportunities for officials to change the narrative about the environmental impact of the facilities, at least according to Rounds.

“Having one of the universities work with a data center or multiple data centers will allow for noise absorption, as well as heat collection devices, to be designed and then manufactured, all in Arizona. That not only mitigates the external factors related to the data centers, but it creates jobs as well.”