Washington lawmakers consider tax break for two data centers in Spokane County

OLYMPIA – Washington lawmakers are considering a special tax exemption for the equipment for two new data centers in Spokane County.

However, it’s not clear who would receive the exemption, or where the projects may be built.

The legislation, which was heard in the House Finance Committee on Friday, would provide a similar credit to those already offered to rural and larger counties in the state. But rather than expand the eligibility of the current exemptions, the bill is tailored specifically to establish new exemptions that apply exclusively to Spokane County.

If approved, the sales and use tax exemption would apply to the purchase and installation of data center equipment. Under the legislation, eligible projects must begin construction after June 30 but before July 1, 2035.

According to a preliminary report issued by the Department of Revenue in December, Spokane County is one of six counties where the tax exemptions for sales and use tax are not currently available.

The bill is sponsored by state Rep. Timm Orsmby, D-Spokane, who was not present at Friday’s hearing. Committee Chair Rep. April Berg, D-Mill Creek, said Friday the bill follows the same standards as a similar exemption the Legislature passed in 2022.

“There are strong labor standards, strong climate standards, and with a nod towards increasing jobs in an area that, frankly, these jobs would not exist but for this credit,” Berg said. “But for these exemptions, this particular project would not be available; these jobs would not be had.”

To qualify, a business would need to create at least 35 family -wage jobs or three family-wage jobs for every 20,000 square feet of space dedicated to housing servers. If a project does not meet the employment requirements, the company would be required to pay previously exempt sales and use taxes.

The state has estimated the exemptions would reduce state revenue by about $1.3 million a year and decrease local revenue by $480,000 a year once the exemptions are used. The estimate is based on the assumption of two eligible data center projects, though details on the projects were not immediately available.

“The bill that passed in 2022 has been incredibly successful; it’s created jobs across our state,” Berg said.

Among those who testified in support of the bill was Spokane County Commissioner Al French, who said the county faces competition from neighboring Kootenai County. To be competitive, French, a Republican, said the region must use “all of the tools available to us.”

“Unfortunately, I don’t even have the tools in Spokane County that most counties in the state have. And that is what this bill is trying to address,” French said. “We’re not asking for anything special; we just want the same tools granted to other counties.”

French said Friday that the data centers “are not the prize,” but rather a piece of a broader push to expand clean energy projects.

The bill received pushback from former Spokane County Commissioner John Roskelley, who said the exemption was specifically for an artificial intelligence company, specifically Microsoft, and Avista, though neither company confirmed those plans.

“Microsoft had a net income of $102 billion in 2025, Avista had a net income of over $200 million,” Roskelley said. “The state, meanwhile, is forecasting a $4 billion deficit over two biennia. Why would the state give a company ranked No. 1 in the world a tax break when it’s struggling to find general fund revenue?”

Roskelley, a Democrat, said the projects are likely to be built whether the tax exemption is passed or not.

“State, and other jurisdictions, will benefit if the bill fails here,” Roskelley said.

Erika Byrne, a spokesperson for Microsoft, said Friday the company “has nothing to share at this time.”

Jared Webley, a spokesperson for Avista, said Friday “since the bill does not apply to Avista” the company does not have a position on the legislation.

“This legislation does not directly offer any tax benefit to Avista,” Webley said. “We do not have plans to seek or use any exemption under this bill.”

Webley said while the company continues to have conversations with “potential large load data center developers” the company has not entered into any agreements to move forward or prepare for serving any specific project.

“Our position has consistently been that large load data center development should only occur in communities that welcome it, and only when the costs of integrating these large loads into our system provide benefits to all of our customers,” Webley said.

Any future agreement with a data center developer, Webley said, would require review and approval by the Washington Utilities and Transportation Commission.