How State and Local Elections Can Affect the Economy

State and local officials can influence projects and infrastructure that matter to businesses and communities, though the wider economic effect is uncertain.

MoneyOctober 26, 20263 min readHow Sureno writes this

The short version

State and local officials can have substantial influence over data center construction and energy infrastructure, so their election results may affect investment and economic activity. ¹
The source reports that AI-related investment has contributed to recent U.S. economic growth, but its estimates come from analysts and do not establish how elections will change growth. ¹
State and local races could shape taxes and public services through government decisions, but the sources do not provide details about particular candidates’ plans or proposals.
The 2026 election calendar includes congressional, gubernatorial, and many state and local contests, with much of the voting scheduled for November 3. ³

How can state and local elections affect the economy?

State and local governments make decisions that can influence where businesses build, what infrastructure is available, and how communities provide public services. In this election cycle, data centers are a prominent example: state and local officials have more influence over their construction and related energy infrastructure than members of Congress do, according to Fortune. ¹

That does not mean one election result automatically determines economic growth. It means local decisions can affect whether projects move ahead, how they connect to energy systems, and what costs or benefits residents and businesses experience.

Why are data centers part of the election debate?

Data centers support computing services, including the infrastructure used for artificial intelligence. Fortune reports that candidates for the House and Senate have made data centers a campaign issue, while state and local officials often have more direct sway over construction and energy infrastructure. ¹

The article cites estimates that large technology companies’ spending could exceed $1 trillion in 2027 and that AI-related investment contributed to recent GDP growth. Those figures are projections and estimates, not guarantees about future spending or growth. ¹

If elected officials favor or oppose particular projects, their decisions could affect investment in their area. The provided sources do not identify which races will determine specific permits, projects, or energy plans.

Could election results change taxes and public services?

They could, because state and local governments make choices about budgets, revenue, and services. Those choices may affect residents, employers, and the conditions businesses consider when deciding where to operate.

But the research provided does not describe candidates’ tax proposals, local budget plans, or likely changes to services. It would be misleading to predict whether taxes will rise or fall, or which services will expand or shrink, based only on these sources.

Do these races matter more than control of Congress?

Not in every way. Congressional elections decide who serves in the House and Senate, and voter views about the economy may influence those contests. ²³ State and local races concern different decisions, including some that can directly shape construction and infrastructure. ¹

Fortune argues that state-level governance may matter greatly to the economy in the current debate over data centers. That is an analysis of the issue, not proof that state and local races will always have a larger economic effect than congressional races. ¹

What can voters and readers conclude now?

The practical takeaway is to look beyond the national races. State and local contests can shape decisions about projects, infrastructure, taxes, and services, but the effects depend on the office, the policies chosen, and how those decisions are carried out.

The supplied sources describe the election calendar and the data center debate, but they do not offer a full comparison of candidates or a forecast of economic results. As of October 26, 2026, the outcome of the upcoming contests and their eventual effects remain unknown. ¹³

What we don't know yet

Which state and local candidates will win the contests scheduled for the 2026 midterm elections. ³
What tax, public-service, data center, and energy policies winning candidates will pursue.
How much any state or local policy change will affect national economic growth.
Whether projected AI investment will occur at the levels described by the analysts cited in the article. ¹

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Questions people ask

Can local elections affect the economy?

Yes. Local officials can influence decisions involving data center construction and energy infrastructure, which can affect business projects and investment in an area. The size of the wider economic effect is not established by the available sources. ¹

Why do state elections matter for data centers?

State and local officials have more sway over data center construction and energy infrastructure than federal lawmakers, according to Fortune. Their decisions can therefore influence whether and how projects proceed. ¹

Can midterm elections change taxes or public services?

State and local election results can affect the officials making budget and policy decisions. The sources provided do not include specific candidate plans, so they do not show whether taxes or services will change in a particular place.

When are the 2026 midterm elections?

The election schedule says voting is due to take place largely on November 3, 2026. The races include all seats in the House, 35 Senate seats, 39 gubernatorial contests, and many state and local elections. ³

Will state and local races matter more than Congress?

They may matter more for some decisions, such as data center construction and energy infrastructure, where state and local officials have greater influence. Congressional elections still determine control of the House and Senate, and the sources do not establish that one level of government will have a greater overall economic effect. ¹³

Sources

Forget the House and the Senate, the economy may hinge on state and local races in the midterm elections | Fortune — Fortune
Voters sound off about the economy ahead of critical midterm elections — NBC News
2026 United States elections — Wikipedia

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