Republicans warn eliminated tax cut could push data centers to competitor states

The Washington state legislature has narrowly passed a bill that eliminates a tax exemption for data center replacement equipment, despite bipartisan opposition. Senate Bill 6231 was a key part of the Democrats' plan to push through a $2 billion spending increase, but Republican lawmakers pleaded with their counterparts to reject it. The Republicans argued that eliminating the tax exemption could affect eastern and central Washington communities that have seen significant economic growth from new data centers. Rep. April Connors called it a "union building trade job killer for Washington state." Rep. Alex Ybarra, whose district includes the data center hub of Quincy, warned that the tax incentive loss would mean the loss of thousands of union jobs. Democratic leaders, including Gov. Bob Ferguson and House Speaker Laurie Jinkins, said they were determined to pass the bill and the overall budget. They were ultimately able to muster the necessary votes, but only after late negotiations. Senate Majority Leader Jamie Pedersen acknowledged data centers will remain a focus as the legislature balances economic development with energy and environmental concerns. Republicans, like Rep. Jim Walsh, warned the move could push data centers to relocate to other states with more favorable tax policies, such as Virginia, Mississippi, and Tennessee. They argued Democrats in Olympia are sending a message that they don't want the data center industry, which has been booming across much of the country.