Oregon: Oregon to revisit tax breaks for data center operators and tech companies

In September, it was announced that tax breaks for data centers in Oregon might be getting a serious re-examination. Over the years, through Oregon's enterprise zone program, tax incentives have made Oregon a haven for data center operators, with Amazon, Apple, Facebook and Google saving around $650 million in property taxes on their Oregon data centers. A decade ago, one data hosting company even said that if power were free in California, it would "still be cheaper" to operate in Oregon. However, following a series of reports by The Oregonian and OregonLive, these tax breaks are now expected to be put under the microscope, with concerns that rural communities have been getting the rough end of the deal when it comes to data center industry development deals, and allegations that some dealings haven't been entirely above board. 

It is alleged that Morrow County officials used these tax incentives to encourage Amazon's growth in the county (in the form of four new data centers) while purchasing Windwave Communications, a local fiber company, to exclusively provide connectivity services for the hyperscale facility. The Oregon Department of Justice is now reviewing the sale of Amazon's fiber-optic provider.

Likewise, in response, a number of reformers are proposing that the program should receive more state-level oversight and there should be limits placed on the size of tax breaks companies can receive. Jody Wiser of Tax Fairness Oregon, for example, said that the tools that are being used were developed decades ago for "industries that didn't exist" and that the incentives need to be recalibrated for the 21st century. On top of this, it has been argued that additional support and resources are required for small communities that are negotiating with major developers or tech companies on development deals.

The legislative session and committee assignments are months away, but it looks like reforms to the enterprise zone program will be pushed forward when they do. In an email to Oregon Live, Danny Moran, spokesperson for House Speaker Dan Rayfield, for example, outlined that Rayfield is interested in a full evaluation of program by the Revenue committee to see where changes can be made to align more with directly supporting workings and low-income families impacted by inflation. Meanwhile, Democratic Sen. Lee Beyer commented that an upcoming review of tax incentives for the chip industry could provide ample opportunity to revisit data center tax breaks, too. Specifically, while he recognized that tax incentives have a role to play in local business recruitment, the OregonLive outlined Beyer said that Oregon lawmakers should consider whether 15-year tax exemptions are too long, and, further to this, whether the size of tax breaks should be tied to the number of jobs created.