Illinois data center buildout could create 120,000 jobs by 2035

A new Illinois Economic Policy Institute and University of Illinois study says planned data center investment could add more than 120,000 jobs, billions in economic output and nearly $300 million a year in property taxes by 2035. The report also warns that electricity costs and other impacts will need policy guardrails as the sector expands.

Why it matters: - Illinois data centers are becoming a major economic engine, with impacts on jobs, tax revenues and local school funding. - The same buildout could raise pressure on the state’s power grid and utility bills if energy supply and policy do not keep pace. - The report argues that policy design can capture the upside while limiting costs for ratepayers, taxpayers and communities.

What happened: - The Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign released a study on data center growth in Illinois. - The report says planned data center investment over the next decade could create more than 120,000 jobs and generate almost $300 million a year in property tax revenue. - Illinois ranks in the top 10 states for data center development, and the Chicago area is the 3rd-largest data center market in the U.S. - About $16 billion was spent on data center construction in Illinois from 2020 through 2024, and another $57 billion is planned over the next decade. - Data centers account for 7% of Illinois electricity demand. - Illinois is one of 38 states that offer sales tax exemptions for data center equipment, materials and infrastructure, and Governor JB Pritzker suspended those exemptions in June.

The details: - Researchers reviewed 75 case studies on data center projects and compiled data on investment, costs, job creation, energy use, water use and property tax payments. - The analysis used IMPLAN, an industry-standard economic model, to estimate future impacts. - The report projects 39,000 skilled construction jobs during the buildout phase. - The report projects 3,000 permanent jobs each year once facilities are operating, including IT specialists and engineers. - The report projects more than 41,000 induced jobs in supply chains and local businesses. - Researchers say at least one-third of the new jobs tied to these facilities will pay six-figure incomes. - Researchers say two-thirds of property tax revenue from the facilities will support local school districts. - A new hyperscale data center could help an average-sized county deliver property tax relief of 3% to 10% for local homeowners. - A data center in DeKalb generates more than $30 million a year in property taxes, including $19 million for public schools. - Residential property taxes in DeKalb have grown 4% slower than the rest of the state, according to the report.

Between the lines: - The report presents data centers as a rare case where industrial growth, high-wage employment and public revenue can align. - The analysis also flags a key tradeoff: more facilities mean more electricity demand, and that could eventually show up in household bills. - Without more energy supply or policy changes, 6.5 gigawatts of planned expansion could raise electric bills by about $12 per month by 2035. - Researchers say Illinois’ geography, cooling advantages and skilled workforce have helped make the state attractive for investment. - The report argues that states with the highest concentration of data centers have seen the lowest spikes in residential electric bills since 2019 when companies are required to cover their own energy and infrastructure needs. - The study suggests policy tools including cost-sharing agreements, Illinois-based clean energy sourcing, sales tax changes tied to stronger energy and environmental standards, closed-loop recycled water or air-cooling systems, battery storage, heat waste recovery and limits on NDAs with elected officials.

What's next: - The report says future data center growth will depend on whether Illinois adopts guardrails that address energy, water and transparency concerns. - The study recommends requiring data centers to pay for 100% of the new energy they need and encouraging on-site or Illinois-based clean energy. - The report also calls for stronger public disclosure rules and more standardized cooling and water-saving practices.

The bottom line: - Illinois sees a large economic upside from data centers, but the report says that upside is most likely to last if policymakers force new facilities to share more of their own costs.