Washington State proposes legislation to restart data center construction, 15 month sales tax exemption

In Olympia, Washington there are two bills introduced with bipartisan support to allow a 15 month sales tax exemption on the purchase and installation of computers for new data centers.

Legislation to boost rural counties

DateWednesday, January 27, 2010 at 5:23PM | AuthorWNJ-Editor

Today is a good day. The bills that we support -- SB 6789 and HB 3147 -- were introduced in Olympia with wide bipartisan support. The 13 sponsors of the bills are from all over the state, from Seattle and Spokane to Walla Walla and Wenatchee. And the state Department of Revenue requested the bills.

The bills allow a 15-month sales-tax exemption on the purchase and installation of computers and energy for new data centers in rural counties. As the bills state, they provide a short-term economic stimulus that will sustain long-term jobs. In other words, the exemption will be temporary, but the jobs and tax revenue from the centers will boost rural counties for years and years to come.

DataCenterKnowledge and I blogged on this issue back in Mar 2008.

Mar 19, 2008

Washington State Gov't uses Interpretation of Manufacturing Tax Law to Tax Data Centers

DataCenterKnowledge reports on the action by the Washington State Legislation to tax data center construction, removing a tax incentive all other gov'ts offer.

Legislation in Washington state that would have restored a tax break for data centers won't be passed in 2008, leaving Microsoft (MSFT) and Yahoo (YHOO) to mull the future of their plans to continue building in the state. Last month Microsoft and Yahoo halted construction on their multi-facility data center campuses in Quincy, Washington while state legislators debated the tax bill.

The tax package was drafted after the state ruled that data centers were no longer covered by a state sales tax break for manufacturing enterprises, and thus must pay a 7.9 percent tax on data center construction and equipment. Gov. Chris Gregoire requested an exemption in Senate Bill 6666, which would restore the exemption for data centers. The bill was caught up in tax politics, with media terming it a $1 billion tax break for high-tech giants.

There were local officials who thought the low energy prices would keep data center momentum, but as the press release, says no data center permits have issued in the state since 2007.

But no data centers have been built in Quincy or anywhere in Washington since the decision in 2007 that made the tax climate inhospitable. Can you imagine how the tech companies -- and jobs and tax revenue -- will return to rural counties if SB 6789 and HB 3147 pass?

The unemployment rate in rural Washington has people’s attention as Facebook went to Prineville, OR.  Note Oregon doesn’t have sales tax.

Grant County in central Washington, for instance, has a whopping 12.5 percent unemployment rate, one of the worst in the state. Its largest city, Moses Lake, has 15,000 people. But just a couple years ago, the city of Quincy nearby, with just 5,000 people, saw the largest tech companies in the world, such as Microsoft and Google, come to town and build massive data centers.


We’ll see if data center construction comes to the State of Washington soon.

In the short term, maybe Microsoft will bring back some of its servers from Texas.

Aug 05, 2009

Washington State Sales Tax Drives Microsoft Windows Azure Servers to Texas

Mary-Jo Foley at ZDNnet picked up news on Microsoft’s decision to remove USA- Northwest from a deployment choice for Windows Azure.

Tax concerns to push Microsoft Azure cloud hosting out of Washington state

Posted by Mary Jo Foley @ 11:55 am

Microsoft is making preparations to move applications that developers are hosting on its Azure cloud infrastructure out of its Washington state datacenter, due to a change in the tax laws there.

Microsoft warned customers testing their apps on the Azure test release about the planned change earlier this week. Microsoft is readying a migration tool to help testers with the move, company officials said.

Cloud-computing and .Net expert Roger Jennings put together all the various reports and clues into a detailed August 5 post on his OakLeaf Systems blog.