AI’s Expanding Capabilities Collide with Trust and Governance

AI Accelerates Progress Amid Rising Risks and Backlash

AI Safety Risks and Human Adaptation

AI Risks, Trust, and Human Judgment in a Changing World

AI talent exodus and environmental data risks

Rising AI Power Meets Regulation and Security

AI model race meets security and regulation

AI Regulation and Infrastructure Expansion

Municipal Budget Cuts, Property Taxes, and Data Centers

The Dallas Morning News recently posted an article about Dallas reducing park-related expenses from its upcoming city budget:

The Dallas Park and Recreation Department has made limited progress toward its long-term goal of making money to rely less on taxpayer funding, a recent city audit found. City staff face pressure to cut $14 million from the parks budget, which could reduce recreation services citywide, slash dozens of jobs and shut down four community centers.

I’m sympathetic to municipalities attempting to use tax dollars wisely, so I like the idea of finding ways to be more efficient. But I hate cutting parks and recreation budgets simply because the services these departments provide seem less valuable. Parks are enormously important to the health and wellbeing of citizens, and long-term studies show no shortage of evidence pointing to health and life expectancy improvements as the result of regular physical activities.

But Dallas is not alone in these struggles. Closer to home, the city of Waco is experiencing similar budget constraints, but instead of targeting parks, this round of budget cuts includes further reducing library operating hours. (Hours were cut last year as well.) It seems hardly outlandish to think that further cutting these operating hours isn’t the best thing for the community.

If only there were opportunities for cities to quickly and massively grow their tax footprint without needing to massively expand their physical infrastructure…

Wait. I think I’ve read about an industry willing to spend, and spend quickly. I’ll acknowledge from the beginning that data centers can use a lot of power, need some degree of water (although as I wrote last year, the actual water usage is paltry compared with total water consumption, particularly in a state as big as Texas), and if there is on-site electricity generation, there can be some noise. With those as caveats, let’s project some numbers.

Year One — Construction Phase Revenue

Let’s consider small and large data centers ($1B vs. $10B) and their potential effects on local economies during the first year:

ProjectValue on tax roll (Jan. 1, ~20% built)¹City property tax @ 50% incentive²Year-one taxable purchases³Local sales tax (1.5%)⁴Total Year 1 city revenue
$1B data center$200M$755,000$200M$3.0M~$3.8M
$10B data center$2.0B$7.55M$1.5B$22.5M~$30.1M

¹ Assumes ~20% of total project value (land, site work, partial construction) is assessed in the first January appraisal. Larger projects build over 3–5 years, so the $10B figure phases in similarly. ² Waco’s FY2025–26 rate of $0.755 per $100, reduced 50% by the assumed incentive (Chapter 312 abatement or Chapter 380 rebate). ³ Materials and equipment purchased/delivered in year one. Texas Tax Code §151.359 exempts qualified data center equipment from the 6.25% state sales tax only — the exemption explicitly does not apply to municipal sales tax. ⁴ Assumes purchases are sourced/delivered such that Waco’s 1.5% rate applies; actual capture depends on purchasing structure, and incentive agreements sometimes rebate a portion.

For Waco specifically, a $3B data center project has the possibility of plugging revenue shortages for 2027. A larger project could possibly provide a tax surplus!

Ongoing Annual Property Tax Revenue

There are different tax structures that data center operators negotiate with cities, but let’s assume a 50% incentive on local property taxes over the first five years. Further, let’s assume that taxable value grows at around 3%, and the 50% incentive expires after year 5:

Project50% incentive property tax/yr (years 1–5)⁵With ~3%/yr growth (by year 5)⁶Full-rate property tax/yr (year 6+)⁷With ~3%/yr growth (year 6+)⁸
$1B data center$3.8M$4.2M$7.6M$8.8M and rising
$10B data center$37.8M$42.5M$75.5M$87.5M and rising

⁵ Full value × 0.755% × 50%: $1B → $3.775M; $10B → $37.75M. ⁶ Year-5 figure after four years of 3% compound growth in taxable value. ⁷ Full value × 0.755% with no incentive, before growth: $1B → $7.55M; $10B → $75.5M. ⁸ Year-6 figure on value grown 3%/yr for five years ($1B → $1.16B; $10B → $11.6B), continuing to grow ~3% annually thereafter if refresh investment continues.

Will data center construction solve municipal revenue shortages? No, I don’t think the world is nearly that simple, but we’d be remiss not to consider those benefits, particularly if the feared AI job apocalypse is even partially correct. Having data centers means that jurisdictions with property tax will have more tax revenue to soften the blow from job losses or other structural changes.

If I were a developer wanting to build a data center, I would lean into this fact. Municipalities also have an opportunity here: they can leverage the anti-AI sentiment that seems to be rising to negotiate more favorable terms for any tax abatement arrangements. Perhaps it’s not 50% abatement over the first 5 years…perhaps it’s 0%, but I won’t dive into specifics.

In the end, these developments need to be advantageous to the companies building them as well as the communities that already live there. I think there are opportunities to do both.


Waco’s projected FY2027 budget gap is $10.7 million. The city’s proposed libraries and museum closures will save $191,000. (In Waco, note that of the $0.755 rate, $0.5845 funds day-to-day operations.) Also, this assumes that the facility sits outside a Tax Increment Financing zone — inside one, the general fund would collect taxes only on the land’s pre-development base value for the life of the zone, so it wouldn’t solve any issues.

Sources: City of Waco FY2025–26 adopted tax rate; The Waco Bridge (July 17, 2026); Texas Tax Code §151.359; Waco local sales tax rate per Texas Comptroller. Growth, phase-in, and purchase-capture assumptions are the author’s estimates.

Note: Claude Fable 5 helped generate these tables from publicly available tax data.

AI Dev Tools Boom and Governance Risks

  • Google Cloud: Review GitHub code using Gemini Code Assist (Jul. 3, 2026)
    Gemini Code Assist on GitHub is an automated reviewer that summarizes pull requests, gives in-depth code reviews, and speeds up reviews, improving code quality. 
  • Simon Willison: Fable's judgement (Jul. 3, 2026)
    A Fireside Chat suggested letting Fable and Opus use their own judgement for tasks like testing, instead of strict rules. Claude Code stored a memory delegating coding to lower‑power subagents, with the main model reviewing, reducing token use, accelerating work.
  • Mistral AI: Leanstral 1.5: Proof Abundance for All (Jul. 2, 2026)
    Leanstral 1.5 is an open model that “verifies complex code properties and uncovers previously unknown bugs in open-source repositories.”
  • WebKit: Introducing the Safari MCP server for web developers (Jul. 1, 2026)
    Safari Technology Preview 247 adds a Safari MCP server that lets local agents connect to a Safari window, inspect DOM, network, screenshots, and console.
  • WSJ: Anthropic Reaches Deal With Trump Administration to Restore Access to Fable AI Model (Jun. 30, 2026)
    Anthropic agreed with the Trump administration to restore access to Fable 5 after fixing Amazon-flagged jailbreaks, adding a safeguard, and redirecting risky prompts. The deal ends a 2½-week shutdown and signals tighter government oversight.
  • WSJ Opinion: AI and the English Language (Jul. 2, 2026)
    Orwell warned against clichés, and AI can flag them, yet it recombines familiar phrases at scale into polished, soulless prose. People may accept popular AI content, but they will still crave original, human voice, honesty, and experience.
  • WSJ: The World’s Top Economists Are Sounding the Alarm on AI (Jul. 1, 2026)
    At a Sintra symposium, central bankers said AI could boost productivity, but also fuel rising debt, investor leverage, stretched valuations, and job losses. They warned AI-driven cyber flaws, and failed productivity gains, could threaten financial stability.
  • Canonry: Every AI Visibility Tool Is Lying to You (Jun. 30, 2026)
    AI visibility tools often present tidy ranks and percentages that hide noisy, personalized, geographic, and nondeterministic behavior, plus scraping and API differences, prompt and scoring biases, and model drift. Honest measurement should show methods, variance, and raw evidence.
  • Business Insider: US energy chief says concerns about data centers are 'overblown' (Jun. 30, 2026)
    US energy secretary Chris Wright called worries about data centers real but overblown, saying benefits like cheaper power and low water use outweigh harms. Polls show 70% oppose local AI data centers.
  • WSJ: A Theoretical AI Bust, South Korea Chips In and Memory Profits Soar (Jun. 30, 2026)
    The Bank for International Settlements warns an AI investment boom, fueled by heavy tech spending and debt, could end in a bust that destabilizes households, markets, and supply chains. Memory-chip expansion and high prices heighten the risk.
  • Tyler Cowen: How will AI and the fertility crisis interact? (Jul. 2, 2026)
    AI will empty public spaces, making each person more noticeable, and spreading small-town habits to cities. People will invest in appearance, charisma, and unique identities. (Or perhaps search for a beautiful space for their college education.)
  • WSJ: Read the Emails Revealing How Anthropic’s Pentagon Relationship Fell Apart (Jul. 2, 2026)
    Emails between Anthropic CEO Dario Amodei, and undersecretary Emil Michael reveal tense talks over Pentagon use of AI, especially surveillance and autonomous weapons, and failed compromises. 
  • WSJ: The Anthropic Fable Ban Is Over. The Battle Over How to Tame AI Has Just Begun. (Jul. 1, 2026)
    The U.S. briefly banned, then lifted, export controls on Anthropic’s Fable, prompting industry fears of government gatekeeping of advanced AI. Companies want clearer rules, while officials balance innovation, security, and competition with China.
  • Aeon: What we can’t measure about AI – yet (Jun. 30, 2026)
    Innovations often show visible harms by existing measures, yet their greatest benefits appear later as new practices, institutions, and possibilities. For example, anaesthesia enabled modern surgery, dating apps reshaped relationships and integration, and electricity spawned new cultural and technological worlds.
  • Boris Cherny: AI Job Archetypes (Jun. 28, 2026)
    Five archetypes — Prototyper, Builder, Sweeper, Grower, and Maintainer — cut across engineers, designers, PMs, and data scientists.