Central Washington data centers bolstering local economies: Tax incentives play key role

The Associated Press reports on the economic benefits to Central Washington produced by the region’s data centers.

Quincy’s property tax collections have quadrupled in the past decade, with more than 70 percent of such revenue coming from data centers. Its sales tax revenue has risen from $665,000 to about $5 million, even with the state tax break.

The surge has helped build a new library, animal shelter and justice center. Schools and utilities also have been improved. That boom might not have occurred if officials had waived local taxes, as their counterparts in many other communities across the nation have done.

“On a per capita basis, these data centers are paying just such an immensely, enormous, gigantic proportion of property tax and sales tax already that it completely dwarfs what we would collect if a manufacturing company or distribution center or something were to come in,” said Jonathan Smith, executive director of the Grant County Economic Development Council, which includes Quincy.

As the story points out, other states and communities aggressively courted the data center industry, offering significant tax incentives. Washington responded by creating a sales tax incentive. Critics charge that the statewide costs of the incentives are not justified by the benefits to local communities. But those arguments overlook the fact that there is no cost and no benefit if the data centers go someplace else. And there’s clear evidence that the incentives make a difference.

When Washington’s tax breaks for data centers temporarily expired in mid-2011, “the building just stopped,” said Curt Morris, a commissioner for the Quincy Port District. “And then we re-established the tax incentives, and it started again.”

Here’s a comprehensive analysis of the economic impact of data centers on Central Washington. Tax policy matters.