Power Hungry: Was one of WA’s biggest corporate tax breaks worth the cost?
www.seattletimes.com
Tax breaks to Microsoft and other Washington data centers were tied to Big Tech job promises, but lawmakers let the results stay hidden from the public.

In 2010, as the country still reeled from the worst economic crisis since the Great Depression, tech companies, real estate developers and rural lobbyists went to the state Capitol in Olympia to press for a tax break for data centers.

Turning it down, supporters argued, would mean rejecting high-paying, long-term and environmentally friendly jobs in distressed parts of rural Washington. Owners of data centers — gargantuan facilities filled with computer servers that power the internet — were scouting Washington and other states for new homes.

“In the end,” then-state Sen. Rodney Tom, D-Medina, who advocated for the tax break, told his Senate colleagues, “we get the clean jobs that all the states are competing with, as far as the jobs it takes to run these things long term.”

State lawmakers nearly unanimously passed the special exemption and have kept the benefits flowing to the industry ever since. But the tax break has strayed from its original promises, and the state failed to fully scrutinize whether the sacrifices were worth it, a deep examination of legislative archives, public tax disclosures and utility data by The Seattle Times and ProPublica revealed.

  • talEnglish
    6·
    5 months ago

    The average annual cost to the state at that time was projected to be $53.3 million between 2015 and 2019.

    That doesn’t sound too earth-shattering.

    More than 65% of the savings since 2018 have gone to Redmond-based Microsoft, a company with reported net earnings of $72.4 billion last year.

    The company said in an emailed statement that the data center tax break from which it benefits “aligns with the intentions of lawmakers.”

    I don’t know if the policy is actually a good idea, but I would imagine that Washington probably does benefit pretty substantially from having Microsoft around. I don’t think that Microsoft has to have datacenters in-state, but meh.

    And speaking purely as someone in California who doesn’t particularly want to pay California datacenter rates, but likes datacenter service and access to services that make use of datacenters, if Washington wants to subsidize datacenters to try and get West Coast business, I’m not complaining.

    https://www.digitalcorereit.com/portfolio/market-overview/northern-california/default.aspx

    Northern California has a reliable and extensive electrical grid. In the Santa Clara/San Jose data center cluster, power is provided by both Pacific Gas & Electric and Silicon Valley Power. These companies encourage using renewable power such as solar, wind, and the more exotic biomass solutions. However, these “green” power sources can often increase a data center’s total cost of ownership. The average power cost throughout Northern California is extremely high. These high costs often factor into the decisions for Northern California-based companies to co-locate in Portland, OR or Seattle, WA, where the typical power cost for data center users is approximately two times less.