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JLARC recommends letting urban data-center server exemption expire; questions on job metrics raised
Summary
JLARC staff told the commission the urban data-center sales-and-use exemption was used mainly for refurbishment and not new construction, and recommended allowing it to expire; Representative Jerry Pollet urged measuring cost-per-job and flagged a potential disincentive to energy conservation in the statute's high-energy requirement.
JLARC staff reviewed the urban sales-and-use tax exemption for computer servers and power infrastructure in qualifying urban counties and recommended that the legislature allow the preference to expire because it has not driven new data-center construction. Staff said the Department of Revenue issued 10 exemption certificates between 2022 and 2025, all for projects in King and Pierce counties, and that beneficiaries saved roughly $42,000,000 on qualifying purchases since FY2023.
Representative Jerry Pollet urged the commission to use this review to request more detailed performance statements from the legislature, arguing staff data implies a high public cost per reported full-time job. Pollet summarized staff figures and said "that's essentially an investment of $275,471 in tax expenditure by the public into these facilities for each job," pressing for cost-per-job analysis and whether those jobs would have been created without the preference. Staff replied that much of the reported activity was for refurbishment and that purchases could have occurred on the industry's normal 3–5 year replacement cycle; staff also noted uncertainty about how many tenants were new to the state versus relocated within Washington.
