Fiscal Note - 5414 SB Data centers/tax preference (Multiple Agency)
Summary
Multiple Agency Fiscal Note Summary for bill 5414 SB, titled Data centers/tax preference, with notes from the Joint Legislative Audit and Review Committee and the Department of Revenue. The Joint Legislative Audit and Review Committee note describes the bill as creating new sales and use tax preferences for eligible server equipment and eligible power infrastructure at data centers in counties that meet certain population criteria, and estimates 2 audit months at approximately $20,300 per audit month for 2021-23. Its Part I estimate is 16,200 in General Fund-State for FY 2022. The Department of Revenue Part I lists GF-State cash receipts of (4,193,000) for 2021-23 and expenditures of 359,900 for 2021-23.
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“Fiscal Note - 5414 SB Data centers/tax preference (Multiple Agency).”
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Multiple Agency Fiscal Note Summary
Bill Number: 5414 SB Title: Data centers/tax preference
Estimated Cash Receipts
Agency Name 2021-23 2023-25 2025-27
GF-State NGF-Outlook Total GF-State NGF-Outlook Total GF-State NGF-Outlook Total
Department of (4,193,000) (4,193,000) (4,200,000) (7,988,000) (7,988,000) (8,000,000) (13,278,000) (13,278,000) (13,300,000)
Revenue
Total $ (4,193,000) (4,193,000) (4,200,000) (7,988,000) (7,988,000) (8,000,000) (13,278,000) (13,278,000) (13,300,000)
Estimated Operating Expenditures
Agency Name 2021-23 2023-25 2025-27
FTEs GF-State NGF-Outlook Total FTEs GF-State NGF-Outlook Total FTEs GF-State NGF-Outlook Total
Joint Legislative .1 20,300 20,300 20,300 .0 8,200 8,200 8,200 .0 8,200 8,200 8,200
Audit and Review
Committee
Department of .9 359,900 359,900 359,900 .0 0 0 0 .0 0 0 0
Revenue
Total $ 1.0 380,200 380,200 380,200 0.0 8,200 8,200 8,200 0.0 8,200 8,200 8,200
Estimated Capital Budget Expenditures
Agency Name 2021-23 2023-25 2025-27
FTEs Bonds Total FTEs Bonds Total FTEs Bonds Total
Joint Legislative Audit .0 0 0 .0 0 0 .0 0 0
and Review Committee
Department of Revenue .0 0 0 .0 0 0 .0 0 0
Total $ 0.0 0 0 0.0 0 0 0.0 0 0
Estimated Capital Budget Breakout
NONE
Prepared by: Ramona Nabors, OFM Phone: Date Published:
(360) 902-0547 Final 2/ 8/2021
FNPID: 61836
FNS029 Multi Agency rollup
Individual State Agency Fiscal Note
Bill Number: 5414 SB Title: Data centers/tax preference Agency: 014-Joint Legislative Audit
and Review Committee
Part I: Estimates
No Fiscal Impact
Estimated Cash Receipts to:
NONE
Estimated Operating Expenditures from:
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years 0.1 0.0 0.1 0.0 0.0
Account
General Fund-State 001-1 16,200 4,100 20,300 8,200 8,200
Total $ 16,200 4,100 20,300 8,200 8,200
Estimated Capital Budget Impact:
NONE
The cash receipts and expenditure estimates on this page represent the most likely fiscal impact. Factors impacting the precision of these estimates,
and alternate ranges (if appropriate), are explained in Part II.
Check applicable boxes and follow corresponding instructions:
If fiscal impact is greater than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete entire fiscal note
form Parts I-V.
X If fiscal impact is less than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete this page only (Part I).
Capital budget impact, complete Part IV.
Requires new rule making, complete Part V.
Legislative Contact: Kellee Gunn Phone: 786-7429 Date: 02/03/2021
Agency Preparation: Dana Lynn Phone: 360-786-5177 Date: 02/03/2021
Agency Approval: Keenan Konopaski Phone: 360-786-5187 Date: 02/03/2021
OFM Review: Gaius Horton Phone: (360) 819-3112 Date: 02/05/2021
Form FN (Rev 1/00) 164,558.00 Request # 25-1
FNS063 Individual State Agency Fiscal Note 1 Bill # 5414 SB
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
Briefly describe by section number, the significant provisions of the bill, and any related workload or policy assumptions, that have revenue or
expenditure impact on the responding agency.
This bill creates new sales and use tax preferences for purchases of and charges to install, construct, repair or
alter eligible server equipment and eligible power infrastructure by data centers in counties that meet certain
population criteria.
Section 1: States the Legislature’s intent to encourage data center usage and investment in urban counties.
TAX PERFORMANCE STATEMENT DETAILS
Section 2: Provides a new tax preference performance statement that categorizes the preferences as intended to
create or retain jobs as indicated in RCW 82.32.808(2)(c).
The Legislature’s specific public policy objective is stated to improve industry competitiveness and increase,
create, or retain jobs in data centers located in counties with a population between 900,000 and 1 million as of
the April 1, 2020, Office of Financial Management estimates. The Legislature’s intent is to provide sales and use
tax exemptions to increase investment in data centers in certain counties, which will grow employment in the
technology industry while adding real and personal property to the state and local property tax rolls.
The Legislature intends to extend the expiration date of the preferences and expand applicability to the entire
state if a review finds that the county tax base increased as a result of the construction, leasing, and other
investment of data centers eligible for the preferences.
To obtain data to perform the review, JLARC staff is directed to refer to data available from the Department of
Revenue (DOR) county property tax assessments and DOR data collected on the annual tax performance report
filed under RCW 82.32.534.
SALES AND USE TAX EXEMPTIONS
Sections 3 and 4: Create new sales and use tax exemptions under chapters 82.08 and 82.12 RCW for:
• Sales to qualifying businesses and tenants of eligible server equipment and for labor and services to install
such equipment.
• Sales to qualifying businesses and tenants of eligible power infrastructure, including charges to construct,
install, repair, alter, or improve the power infrastructure at an eligible computer data center.
No new exemption certificates may be issued on or after July 1, 2027, and the exemptions provided in the bill
expire July 1, 2037.
Businesses qualifying for the exemptions must be located in a county with a population between 900,000 and 1
million, as determined by the April 1, 2020, Office of Financial Management estimates, and must apply to DOR
for an exemption certificate. DOR must issue certificates to qualifying businesses and tenants. Qualifying
businesses must submit records to demonstrate that they have a minimum of 1.5 megawatts of available power
when they apply to DOR. Qualifying tenants must contract for a minimum electrical capacity of 150 kilowatts.
Tenants that previously qualified under RCWs 82.08.986 or 82.12.986 must reapply if they intend to expand into
a qualifying business.
Data centers/tax preference 014-Joint Legislative Audit and Review Committee
Form FN (Rev 1/00) 164,558.00 Request # 25-1
FNS063 Individual State Agency Fiscal Note 2 Bill # 5414 SB
The number of exemptions provided is limited to two qualifying business or tenant applications in the first year,
and one each year in years three through six (six total). The exemption is available on a first-in-time basis, based
on when DOR receives the application. The exemption certificate is effective on the date DOR receives the
application, which is deemed the date of issuance. Exemption certificates expire two years after the date of
issuance unless construction has started.
Within six years of when the exemption certificate was issued, the business or tenant must establish that net
employment at the data center has increased by a minimum of three family wage employment positions for each
incremental increase of 20,000 square feet of space that is newly dedicated to housing working servers. Criteria
for determining the number of family wage employment positions is detailed in the bill.
Section 5: Creates a new section in chapter 82.08 RCW detailing that, in order to obtain the exemption provided
in section 3, a qualifying business or tenant must certify to DOR that the computer data center receiving the
exemption is developed in a way that includes community workforce agreements or project labor agreements,
and payment of area standard prevailing wages and apprenticeship use requirements, with specific requirements
for owners, prime, and subcontractors for bid selection detailed.
There are multiple expiration dates listed in the bill.
II. B - Cash receipts Impact
Briefly describe and quantify the cash receipts impact of the legislation on the responding agency, identifying the cash receipts provisions by section
number and when appropriate the detail of the revenue sources. Briefly describe the factual basis of the assumptions and the method by which the
cash receipts impact is derived. Explain how workload assumptions translate into estimates. Distinguish between one time and ongoing functions.
II. C - Expenditures
Briefly describe the agency expenditures necessary to implement this legislation (or savings resulting from this legislation), identifying by section
number the provisions of the legislation that result in the expenditures (or savings). Briefly describe the factual basis of the assumptions and the
method by which the expenditure impact is derived. Explain how workload assumptions translate into cost estimates. Distinguish between one time
and ongoing functions.
JLARC staff would contact and work with the Department of Revenue and other appropriate agencies
immediately after passage of the bill to ensure project contacts are established and any other necessary data for
JLARC staff’s future evaluation needs are identified and collected.
While there are multiple expiration dates listed in the bill, JLARC staff assume the latest expiration date of 2037
will be used for scheduling a JLARC review. Thus, JLARC would likely review the tax preference in 2035, two
years before the 2037 expiration date.
This tax preference review may require additional resources. The audit will be conducted and presented to
JLARC consistent with the processes used for other tax preference reviews. Based on all tax preference
legislation that is passed, JLARC may subsequently determine that it can absorb the costs for this proposed bill in
its base budget, if the workload of other enacted tax preference legislation does not exceed current staffing.
JLARC will assess all of the tax preference reviews mandated in the 2021 legislative session.
This audit will require an estimated 2 audit months.
JLARC Audit Months: JLARC calculates its staff resources in "Audit Months" to estimate the time and effort to
undertake and complete its studies. An "Audit Month" reflects a JLARC analyst’s time for a month, together with
related administrative, support, and goods/services costs. JLARC’s anticipated 2021-23 costs are calculated at
approximately $20,300 per audit month.
Data centers/tax preference 014-Joint Legislative Audit and Review Committee
Form FN (Rev 1/00) 164,558.00 Request # 25-1
FNS063 Individual State Agency Fiscal Note 3 Bill # 5414 SB
Part III: Expenditure Detail
III. A - Operating Budget Expenditures
Account Account Title Type FY 2022 FY 2023 2021-23 2023-25 2025-27
001-1 General Fund State 16,200 4,100 20,300 8,200 8,200
Total $ 16,200 4,100 20,300 8,200 8,200
III. B - Expenditures by Object Or Purpose
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years 0.1 0.1
A-Salaries and Wages 10,200 2,500 12,700 5,000 5,000
B-Employee Benefits 3,200 800 4,000 1,600 1,600
C-Professional Service Contracts
E-Goods and Other Services 2,600 700 3,300 1,400 1,400
G-Travel 200 100 300 200 200
J-Capital Outlays
M-Inter Agency/Fund Transfers
N-Grants, Benefits & Client Services
P-Debt Service
S-Interagency Reimbursements
T-Intra-Agency Reimbursements
9-
Total $ 16,200 4,100 20,300 8,200 8,200
III. C - Operating FTE Detail: List FTEs by classification and corresponding annual compensation. Totals need to agree with total FTEs in
Part I and Part IIIA
Job Classification Salary FY 2022 FY 2023 2021-23 2023-25 2025-27
Research Analyst 113,827 0.1 0.1
Support staff 77,705
Total FTEs 0.1 0.1 0.0
III. D - Expenditures By Program (optional)
NONE
Part IV: Capital Budget Impact
IV. A - Capital Budget Expenditures
NONE
IV. B - Expenditures by Object Or Purpose
NONE
IV. C - Capital Budget Breakout
Identify acquisition and construction costs not reflected elsewhere on the fiscal note and describe potential financing methods
NONE
IV. D - Capital FTE Detail: List FTEs by classification and corresponding annual compensation. Totals need to agree with total FTEs in
Part IVB
NONE
Data centers/tax preference 014-Joint Legislative Audit and Review Committee
Form FN (Rev 1/00) 164,558.00 Request # 25-1
FNS063 Individual State Agency Fiscal Note 4 Bill # 5414 SB
Part V: New Rule Making Required
Data centers/tax preference 014-Joint Legislative Audit and Review Committee
Form FN (Rev 1/00) 164,558.00 Request # 25-1
FNS063 Individual State Agency Fiscal Note 5 Bill # 5414 SB
Department of Revenue Fiscal Note
Bill Number: 5414 SB Title: Data centers/tax preference Agency: 140-Department of
Revenue
Part I: Estimates
No Fiscal Impact
Estimated Cash Receipts to:
Account FY 2022 FY 2023 2021-23 2023-25 2025-27
GF-STATE-State (1,897,000) (2,296,000) (4,193,000) (7,988,000) (13,278,000)
01 - Taxes 01 - Retail Sales Tax
Performance Audits of Government (3,000) (4,000) (7,000) (12,000) (22,000)
Account-State
01 - Taxes 01 - Retail Sales Tax
Total $ (1,900,000) (2,300,000) (4,200,000) (8,000,000) (13,300,000)
Estimated Expenditures from:
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years 1.3 0.6 0.9
Account
GF-STATE-State 001-1 289,900 70,000 359,900
Total $ 289,900 70,000 359,900
Estimated Capital Budget Impact:
NONE
The cash receipts and expenditure estimates on this page represent the most likely fiscal impact. Factors impacting the precision of these estimates,
and alternate ranges (if appropriate), are explained in Part II.
Check applicable boxes and follow corresponding instructions:
If fiscal impact is greater than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete entire fiscal note
X
form Parts I-V.
If fiscal impact is less than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete this page only (Part I).
X Capital budget impact, complete Part IV.
Requires new rule making, complete Part V.
Legislative Contact: Kellee Gunn Phone: 786-7429 Date: 02/03/2021
Agency Preparation: Marianne McIntosh Phone: 360-534-1505 Date: 02/08/2021
Agency Approval: Don Gutmann Phone: 360-534-1510 Date: 02/08/2021
OFM Review: Ramona Nabors Phone: (360) 902-0547 Date: 02/08/2021
Request # 5414-1-1
Form FN (Rev 1/00) 165,192.00 1 Bill # 5414 SB
FNS062 Department of Revenue Fiscal Note
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
Briefly describe, by section number, the significant provisions of the bill, and any related workload or policy assumptions, that have revenue or
expenditure impact on the responding agency.
Note: This fiscal note reflects language in SB 5414, 2021 Legislative Session.
CURRENT LAW
Sales and use tax is assessed on server equipment and power infrastructure for data centers located in urban counties.
PROPOSED LAW
This bill adds a new section to RCW 82.08 creating a sales tax exemption for qualifying businesses operating data centers and
qualifying tenants of these data centers. The data centers must be located in counties with a population between 900,000 to 1
million as determined by the April 1, 2020 Office of Financial Management population estimates.
The exemption includes purchases of eligible server equipment and power infrastructure. The exemption for server equipment
includes labor and services for installing eligible server equipment. The exemption for power infrastructure includes purchases
of material and equipment as well as labor and service for constructing, installing, repairing, altering, or improving eligible
power infrastructure.
Qualifying businesses or tenants must submit an application to the Department of Revenue (Department). The application must
include information necessary to determine the business or tenant qualifies for the exemption. Qualifying businesses must
submit records indicating it has a minimum of 1.5 megawatts of available power for customers at the time of application. In
order for a qualifying tenant to obtain the exemption, they must contract for a minimum electrical capacity of 150 kilowatts for
server and computer equipment in a qualifying business.
Qualifying businesses or tenants must certify to the Department the data center receiving the exemption is developed in a way
that meets community workforce agreements or project labor agreements.
The Department can approve two applications submitted by qualifying businesses in year one and one each year beginning in
year three through year six. The exemption is available on a first-in-time basis based on the date the application is received by
the Department. No new exemption certificates may be issued on or after July 1, 2027. Certificates expire two years after the
date of issuance unless construction has commenced. There is no limit on the number of exemption certificates that can be
issued to qualifying tenants.
An eligible computer data center must be comprised of one or more buildings with a combined square footage of at least
100,000 square feet and at least 20,000 square feet dedicated to housing working servers.
Eligible server equipment requirements for qualifying businesses:
- Original server equipment installed in an eligible data center on or after the effective date of the bill.
- Replacement servers replace existing server equipment if the original server equipment qualified for this exemption and is
installed and put into regular use 10 years after the effective date of this bill. The retail sales tax exemption expires before this
occurs, therefore replacement servers are not exempt.
Eligible server equipment requirements for qualifying tenants:
- Original server equipment installed within the space leased in an eligible data center on or after 10 years after the effective
date of this bill. The retail sales tax exemption expires before this occurs, therefore original server equipment for qualifying
tenants is not exempt.
- Replacement servers replace qualifying server equipment installed and put into regular use prior to July 1, 2027. For tenants,
original server equipment does not qualify due to installation date occurring after the expiration date of this exemption,
Request # 5414-1-1
Form FN (Rev 1/00) 165,192.00 2 Bill # 5414 SB
FNS062 Department of Revenue Fiscal Note
therefore replacement servers replacing original servers do not qualify for the exemption.
- Replacement servers replace existing equipment in qualifying data center meeting the following requirements: has been
refurbished and has a valid certificate; and is installed and put into regular use no later than 12 years after the date of the
certificate of occupancy or completion of refurbishment of the data center.
The qualifying business or tenant claiming the retail sales tax exemption must complete an annual tax performance report.
The retail sales tax exemption expires July 1, 2037, however the entire section expires July 1, 2031 and ends the exemption 6
years earlier than expected.
Use tax exemption applies to those who qualified under the retail sales tax section. The use tax exemption expires July 1, 2027.
EFFECTIVE DATE
The bill takes effect 90 days after final adjournment of the session in which it is enacted.
II. B - Cash receipts Impact
Briefly describe and quantify the cash receipts impact of the legislation on the responding agency, identifying the cash receipts provisions by section
number and when appropriate the detail of the revenue sources. Briefly describe the factual basis of the assumptions and the method by which the
cash receipts impact is derived. Explain how workload assumptions translate into estimates. Distinguish between one time and ongoing functions.
ASSUMPTIONS
- The fiscal note is written to intent. If the bill is not changed in a substitute version then the Department will need to
revise the fiscal note to reflect bill as written.
- The earliest an application can be submitted to the Department is July 27, 2021. The date the Department receives the
application is the effective date of the approved certificate. Therefore, there are ten months of cash collections in Fiscal
Year 2022.
- The exemption is limited to data centers located in Pierce County.
- Qualifying businesses and tenants will meet the power requirements prior to applying to the Department.
- The approved application limit will be met. Two applications approved within the first year and one application approved
per year in year 3 through 6.
- Data centers with one or more buildings must have a combined square footage of at least 100,000 square feet. Currently,
the Department is aware of one completed data center facility, SH2 under Centeris, in Pierce County that meets this
criteria. Centeris notes they have up to 750,000 square feet available for purpose-built or shared data center facilities.
- No new exemption certificates may be issued on or after July 1, 2027.
- It takes approximately 18 to 24 months to complete a data center. Twenty-five percent of the dedicated server space will
be filled each year and thereafter until full capacity is reached.
- The average size of a new data center is approximately 215,000 square feet with an estimated 100,000 square feet of
dedicated server space.
- The average cost per square foot for equipment including power infrastructure is $1,000.
- Servers are refreshed every three years. This is due to cost savings and upgrading equipment.
DATA SOURCES
- Department of Revenue, Annual tax performance report
- United Sates Chamber of Commerce, Technology Engagement Center, Data Centers Report 2017,
https://www.uschamber.com/sites/default/files/ctec_datacenterrpt_lowres.pdf
- The Engineering Projects,
https://www.theengineeringprojects.com/2018/12/what-are-data-centers-and-how-much-do-they-cost.html
- Puget Sound Business Journal,
https://www.bizjournals.com/seattle/news/2019/03/21/opinion-washington-must-compete-for-moredata.html
- Centeris.com/resources, SH2 Build-to-Suit Data Sheet
REVENUE ESTIMATES
Request # 5414-1-1
Form FN (Rev 1/00) 165,192.00 3 Bill # 5414 SB
FNS062 Department of Revenue Fiscal Note
This bill decreases state revenues by an estimated $1.9 million in the 10 months of impacted collections in Fiscal Year
2022, and by $2.3 million in Fiscal Year 2023, the first full year of impacted collections. This bill also decreases local
revenues by an estimated $950,000 in the 10 months of impacted collections in Fiscal Year 2023, and by $1.1 million in
Fiscal Year 2023, the first full year of impacted collections.
TOTAL REVENUE IMPACT:
State Government (cash basis, $000):
FY 2022 - ($ 1,900)
FY 2023 - ($ 2,300)
FY 2024 - ($ 4,000)
FY 2025 - ($ 4,000)
FY 2026 - ($ 5,800)
FY 2027 - ($ 7,500)
Local Government, if applicable (cash basis, $000):
FY 2022 - ($ 950)
FY 2023 - ($ 1,140)
FY 2024 - ($ 1,990)
FY 2025 - ($ 1,990)
FY 2026 - ($ 2,840)
FY 2027 - ($ 3,690)
II. C - Expenditures
Briefly describe the agency expenditures necessary to implement this legislation (or savings resulting from this legislation), identifying by section
number the provisions of the legislation that result in the expenditures (or savings). Briefly describe the factual basis of the assumptions and the method
by which the expenditure impact is derived. Explain how workload assumptions translate into cost estimates. Distinguish between one time and
ongoing functions.
ASSUMPTIONS:
This bill affects 6 taxpayers.
FIRST YEAR COSTS:
The Department will incur total costs of $289,900 in Fiscal Year 2022. These costs include:
Labor Costs – Time and effort equates to 1.28 FTEs.
- Amend three excise tax advisories (ETA).
- Create a Special Notice and identify publications and information that need to be updated.
- Respond to email inquiries and more difficult call backs from the telephone information center.
- Set up, program, and test computer system changes.
- Review and process applications, monitor reports, quality check and work review, and assist in creating and writing
procedures.
- System testing and maintenance indefinitely, updating the data center case and corresponding letters, and perform
division training.
- Provide technical advice, interpretation and analysis during the implementation process.
- Assist with the rule making process.
Object Costs - $132,000.
- Contract computer system programming.
SECOND YEAR COSTS:
The Department will incur total costs of $70,000 in Fiscal Year 2023. These costs include:
Request # 5414-1-1
Form FN (Rev 1/00) 165,192.00 4 Bill # 5414 SB
FNS062 Department of Revenue Fiscal Note
Labor Costs – Time and effort equates to 0.6 FTEs.
- Review and process applications, monitor reports, quality check and work review.
- Provide technical advice, interpretation and analysis during the implementation process.
- Assist with the rule making process.
ONGOING COSTS:
There are no ongoing costs.
Part III: Expenditure Detail
III. A - Expenditures by Object Or Purpose
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years 1.3 0.6 0.9
A-Salaries and Wages 97,700 46,000 143,700
B-Employee Benefits 35,300 16,600 51,900
C-Professional Service Contracts 132,000 132,000
E-Goods and Other Services 16,100 6,700 22,800
J-Capital Outlays 8,800 700 9,500
Total $ $289,900 $70,000 $359,900
III. B - Detail: List FTEs by classification and corresponding annual compensation. Totals need to agree with total FTEs in Part I
and Part IIIA
Job Classification Salary FY 2022 FY 2023 2021-23 2023-25 2025-27
EMS BAND 4 119,061 0.0 0.0
EMS BAND 5 139,090 0.0 0.0
EXCISE TAX EX 3 59,688 0.1 0.1 0.1
IT SYS ADM-JOURNEY 89,916 0.3 0.2
MGMT ANALYST4 70,956 0.2 0.1 0.2
TAX INFO SPEC 4 64,332 0.2 0.1
TAX POLICY SP 2 72,756 0.0 0.0
TAX POLICY SP 3 82,344 0.4 0.4 0.4
TAX POLICY SP 4 88,644 0.0 0.0
WMS BAND 3 101,257 0.0 0.0
Total FTEs 1.3 0.6 1.0
III. C - Expenditures By Program (optional)
NONE
Part IV: Capital Budget Impact
IV. A - Capital Budget Expenditures
NONE
IV. B - Expenditures by Object Or Purpose
NONE
IV. C - Capital Budget Breakout
Identify acquisition and construction costs not reflected elsewhere on the fiscal note and dexcribe potential financing methods
NONE
Request # 5414-1-1
Form FN (Rev 1/00) 165,192.00 5 Bill # 5414 SB
FNS062 Department of Revenue Fiscal Note
None.
Part V: New Rule Making Required
Request # 5414-1-1
Form FN (Rev 1/00) 165,192.00 6 Bill # 5414 SB
FNS062 Department of Revenue Fiscal Note
LOCAL GOVERNMENT FISCAL NOTE
Department of Commerce
Bill Number: 5414 SB Title: Data centers/tax preference
Part I: Jurisdiction-Location, type or status of political subdivision defines range of fiscal impacts.
Legislation Impacts:
X Cities: decreased sales and use tax revenue
X Counties: decreased sales and use tax revenue
X Special Districts: decreased sales and use tax revenue
Specific jurisdictions only:
Variance occurs due to:
Part II: Estimates
No fiscal impacts.
Expenditures represent one-time costs:
Legislation provides local option:
Key variables cannot be estimated with certainty at this time:
Estimated revenue impacts to:
None
Estimated expenditure impacts to:
None
Part III: Preparation and Approval
Fiscal Note Analyst: Angie Hong Phone: 360-725-5041 Date: 02/08/2021
Leg. Committee Contact: Kellee Gunn Phone: 786-7429 Date: 02/03/2021
Agency Approval: Allan Johnson Phone: 360-725-5033 Date: 02/08/2021
OFM Review: Ramona Nabors Phone: (360) 902-0547 Date: 02/08/2021
Page 1 of 3 Bill Number: 5414 SB
FNS060 Local Government Fiscal Note
Part IV: Analysis
A. SUMMARY OF BILL
Provide a clear, succinct description of the bill with an emphasis on how it impacts local government .
Section 1 (new) establishes the intent of the bill: to extend a data center tax incentive to an urban county.
Section 2 (new) establishes a tax preference that will apply in Pierce County and will provide a sales and use tax exemption on eligible
computer data centers, charges made for labor and services rendered in respect to installing eligible server equipment , and for
construction, installation, repair, alteration, or improvement of eligible power infrastructures.
A review of the economic impacts of this tax preference will be completed by JLARC . The legislature may extend the expiration and
expand the applicability of this tax preference state-wide if it increases the county tax base .
Section 3 (new) describes how eligible tax-exempt businesses and tenants must interact with the DOR in order to receive tax preference
benefits. This section expires 1/1/2031.
Section 4 (new) establishes a use tax exemption that expires 1/1/2027.
Section 5 (new) requires an eligible business or tenant to certify their development includes community workforce agreements or project
labor agreements and pays the area’s standard prevailing wages and apprenticeship requirements .
B. SUMMARY OF EXPENDITURE IMPACTS
Briefly describe and quantify the expenditure impacts of the legislation on local governments , identifying the expenditure provisions by
section number, and when appropriate, the detail of expenditures. Delineate between city, county and special district impacts.
This bill will not impact local government expenditures.
C. SUMMARY OF REVENUE IMPACTS
Briefly describe and quantify the revenue impacts of the legislation on local governments , identifying the revenue provisions by section
number, and when appropriate, the detail of revenue sources. Delineate between city, county and special district impacts.
This bill decreases local government revenues by an estimated $950 ,000 in the 10 months of impacted collections in Fiscal Year 2022, and
by $1,140,000 in Fiscal Year 2023, the first full year of impacted collections, according to the Dept. of Revenue.
COUNTIES
FY 2022 - ($ 331,165)
FY 2023 - ($ 397,397)
FY 2024 - ($ 693,703)
FY 2025 - ($ 693,703)
FY 2026 - ($ 990,008)
FY 2027 - ($1,286,313)
CITIES
FY 2022 - ($ 282,382)
FY 2023 - ($ 338,859)
FY 2024 - ($ 591,516)
FY 2025 - ($ 591,516)
FY 2026 - ($ 844,174)
FY 2027 - ($1,096,832)
SPECIAL DISTRICTS
FY 2022 - ($ 326,953)
FY 2023 - ($ 392,343)
FY 2024 - ($ 684,881)
FY 2025 - ($ 684,881)
FY 2026 - ($ 977,418)
FY 2027 - ($1,269,955)
Page 2 of 3 Bill Number: 5414 SB
FNS060 Local Government Fiscal Note
METHODOLOGY:
The distributions in this note for cities, counties, and special districts are based on DOR data for local sales and use tax distributions from
Calendar Year 2019. Mitigation payments and distributions to hospital benefit zones are not factored into this distribution . The result is a
distribution of 35.21 percent to counties, 30.02 percent to cities, and 34.76 percent to special districts. The one percent DOR
administrative fee has also been deducted.
SOURCES:
Department of Revenue Fiscal Note 5414-1 SB
LGFN Sales and Use Tax Distribution Model
Pierce County
Page 3 of 3 Bill Number: 5414 SB
FNS060 Local Government Fiscal Note
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