Senate eyes data bill tax exemptions

OLYMPIA - Central Washington could become a "mini Silicon Valley" if a tax exemption for data centers is approved, proponents of the bill say.

The senate is considering a bill that would extend the expiration of sales and use tax exemptions from 2015 to 2025 on purchases of certain server equipment and power improvements for new data centers. SB 6550 was approved by the senate fiscal committee Tuesday.

"The cloud computing boom's not going away," Pat Boss, of Port of Quincy, said, speaking in favor of the bill at a hearing Monday.

"The Port of Quincy had a great deal of success in recruiting high-tech data centers such as Microsoft, Yahoo, Intuit, Dell, Vantage and Sabey to locate in Quincy because of competitive electrical-power rates and state-of-the-art fiber-optic connections there," he said.

Rep. Janéa Holmquist Newbry (R-Moses Lake), the bill's sponsor, called it vital for bringing investment into Washington.

"The only thing standing in our way is that these high-tech firms need certainty, and in this highly competitive environment, if we don't offer them that level of certainty, some other state most definitely will," Newbry said in a press release.

When the tax exemption has been allowed to expire, she said, companies including Facebook and Amazon chose other states such as Oregon for their data centers.

John Sabey, president of Sabey Data Center Properties, testified in favor of the bill.

He said Washington has some of the lowest prices for power, which helps make the state competitive, but other states have more tax benefits for tech companies.

"They've essentially given everything away," Sabey said. "We're basically on equal footing with the incentives."

The fiscal note for the bill estimates a loss of about $18.7 million in taxes to the state, and $4.9 million for local government.

But Quincy Mayor Jim Hemberry believes that costs would be more than compensated for by a gain in property taxes paid by new data centers, a benefit the city has had from the current centers.

"The city has used the influx of new revenue to address longstanding capital-improvement projects including upgrading the senior center, parks, museum and streets, and for the purchase of critical public-safety needs, including fire equipment and the construction of a new police facility," Hemberry said.

The current tax exemption is set to expire in 2015. The bill would extend the date to 2025.

Sen. Bob Hasegawa, D-Beacon Hill, tried to amend the bill so the tax break would only be in effect until 2019, but the amendment didn't pass. He said the benefits would be construction jobs, and was concerned that the bill as written would not create that many.

The bill will next be considered by the rules committee before being voted on by the senate.