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Is Washington’s data center tax break too late?

Washington state leaders feel they’re back in the data center game.

Last week Gov. Chris Gregoire signed a bill that could help data centers expand or set up shop in Washington rural counties. The law allows tax breaks for data centers in any county other than Spokane, King, Pierce, Snohomish, Clark and Thurston.

Though Washington is facing massive budget deficits, state leaders were clearly warned that without a bill that cut sales taxes on new data center equipment, the future of expansion by Yahoo, Microsoft and other tech firms was minimal.

From 2006 until 2008, Microsoft, Intuit and Yahoo all built large data centers in Grant County, using the Port of Quincy’s low power rates and redundant fiber connectivity to justify the investment.

Even if the data centers only created plenty of jobs during construction, the impact on the rural fly-over zoneswas positive and inspired the belief that plenty more tenants would set up shop.

But starting in 2008 the big guys, especially Yahoo and Microsoft, stopped expanding their Washington data centers. And no one doubted those delays came after the failure by state legislators to enact tax breaks for purchases of new equipment.

So this time around, the Democrats in Olympia responded by crafting this specific industrial tax break for data centers in rural counties.

Will it make a difference? There are doubters. They say Yahoo and Microsoft  have already chosen where they’ll expand data operations, and it’s no longer in the Evergreen State. The law may entice some mid-sized operators, but. say the nay-sayers, it won’t change the faint appetite Yahoo and Microsoft have acquired for operating the data storage industry here.

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The Spokesman-Review business team follows economic development in Spokane and the Inland Northwest.

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John Stucke John Stucke is a deputy city editor who helps build local news coverage and writes about health care, bankruptcy and rural affairs.

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Alison Boggs Online Producer Alison Boggs posts and manages content on and its social networking accounts.

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Scott Maben Scott Maben is a Deputy City Editor who covers North Idaho news and higher education.

Addy Hatch is the city editor, and formerly was business editor.

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