Data Centers Boost Tax Revenue in Quincy

New data centers from Microsoft, Yahoo and several other high-tech firms are providing a significant boost to the economy of Quincy, Washington, local officials said this week. Quincy city administrator Tim Snead told the Wenatchee World that the building phase of the new data centers server farms had a huge impact on the city's sales taxes. After receiving $700,000 in sales taxes in 2005, Quincy's tax revenue grew to $1.5 million in 2006 and nearly tripled to $4.3 million last year.

Sales tax revenue is expected to recede as a number of data center projects are completed, reducing the volume of construction workers at local sites. Quincy is a small farm town that had 5,300 residents when it was selected for the Microsoft project in 2006. Yahoo, Ask.com, Intuit, Sabey Corp. and Base Partners have since announced projects in central Washington.

Legislation in Washington state that would have restored a tax break for data centers won't be passed in 2008, leaving Microsoft (MSFT) and Yahoo (YHOO) to mull the future of their plans to continue building in the state. The tax package was drafted after the state ruled that data centers were no longer covered by a state sales tax break for manufacturing enterprises, and thus must pay a 7.9 percent tax on data center construction and equipment.

Curt Morris, president of the Quincy Port District. Curtis said even without the tax incentive, other companies are still looking to locate data centers in Quincy because it still offers cheap power and cheap land. He also said that the is beginning to diversify its economy, with several companies also considering non-data center local projects.