via schiffsovereign
On Tuesday, New York Governor Kathy Hochul signed the nation’s first statewide ban on new AI data centers. Data center development, she explained, “threatens to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers.”
Officially it’s a one-year moratorium while Albany designs a “regulatory framework.”
She’s not wrong that New Yorkers are hurting. They already pay roughly 70% above the national average for electricity, and utility bills are the kind of issue that decides elections, because everybody pays one.
Hochul is running for re-election in November and needed someone to blame for those bills. So she blamed data centers, because she couldn’t blame the real culprit, her own government.
In 2019, New York passed the Climate Leadership and Community Protection Act, a law committing the state to a zero-emission grid. Since then, the state has deactivated 4.4 gigawatts of fossil fuel generation, shut down the Indian Point nuclear plant in 2021 for good measure, and added back just 2.9 gigawatts, almost all of it intermittent wind and solar.
In other words, New York destroyed more reliable power than it built, as deliberate policy, and then acted shocked when electricity became scarce and expensive.
Even the New York Independent System Operator, the organization that runs the state’s power grid, blames Albany. In June it warned that the grid is losing the dispatchable plants that keep the system stable, the ones that work on a windless night in January.
The same grid operator projects that New York’s electric vehicle and building electrification mandates will pile on more than twice the demand of data centers through 2040. The biggest new strain on the grid isn’t AI at all; it’s Albany’s own mandates.
But true to form, New York’s politicians didn’t bother doing the math.
The moratorium hits any new data center drawing 50 megawatts or more. Yet Hochul spent years championing Micron’s $100 billion chip fab near Syracuse, a facility that will draw 1.85 gigawatts around the clock. That’s more electricity than New Hampshire and Vermont use combined, and 37 times the limit she just imposed on everyone else.
(That is, it will draw 1.85 gigawatts if it ever gets built. So far the project has produced a 719-page environmental review, ten bat houses for the endangered northern long-eared bat, and a lawsuit from activists who want production stopped entirely. But no chips.)
But the truly wild thing about Hochul’s ban is what New York is giving up. It isn’t AI; it’s the tax revenue the state claims to desperately need, from the very corporations it keeps saying should pay more.
For example, Meta’s giant data center in Richland Parish, Louisiana, one of the poorest corners of that state, made its first local sales tax payment of $22.4 million this year. The school district used some of the money to hand its certified teachers bonuses of up to roughly $50,000.
In Loudoun County, Virginia, data centers pay about $895 million a year in property taxes against a county operating budget of roughly $940 million. That covers about 95% of the budget and saves a typical homeowner around $5,800 a year.
And New York has run this exact play before.
In December 2014, then-Governor Andrew Cuomo banned fracking statewide, right as the shale boom was making landowners across the border wealthy. Pennsylvania kept drilling; by 2022, an industry study counted 123,000 jobs, $41 billion in economic activity, and $6.3 billion in royalties in a single year.
New York’s slice of the same Marcellus Shale sat untouched beneath struggling farmland. And Albany never reconsidered. To this day, New York bans the practice within its borders while importing fracked Pennsylvania gas to heat New York homes.
(Sort of like when the UK did the same thing with the North Sea: it halted all new oil and gas licenses in the name of climate change, then kept buying oil that Norway pumps from the very same basin. The oil is identical; the jobs, the taxes, and the profits are just Norwegian now.)
Albany never repeals the policy that caused the problem; it just piles a new ban on top. New York’s power scarcity is self-inflicted, and the official answer to that scarcity is to ration demand rather than restore supply.
The AI buildout is going to happen either way. The data centers will be built, the taxes will be paid, and somebody’s teachers will get the bonuses, or whatever else they decide to do with the money.
New York has simply decided that none of it will happen there. They will have to find other wealthy people to fleece to fund the state’s priorities, such as housing illegal immigrants in Manhattan hotels, restocking the city’s crack pipe vending machines, and handing money to welfare fraudsters.
I wouldn’t count on Albany coming to its senses. It has had more than a decade to reconsider the fracking ban and hasn’t blinked.
When a government manufactures its own scarcity and refuses to reverse course no matter the cost, the sensible move is to make sure your prosperity doesn’t depend on its competence.
That’s the whole point of having a Plan B.
P.S. The corporations New York just turned away all have one advantage in common: they can choose their jurisdiction. So can you.
Plan B Confidential is Schiff Sovereign’s flagship research service on doing exactly that, covering legal second residencies and citizenships, foreign banking, tax reduction strategies, and boots-on-the-ground intelligence from more than 120 countries. It exists so that your income, your savings, and your family’s options never depend on a single government’s competence. Click here to learn more.