House Revenue Committee rejects bill removing sales tax exemptions on data centers

Tom Coulter, Wyoming Tribune-Eagle, Cheyenne
·4 min read

Feb. 23—CHEYENNE — With several local leaders from Cheyenne opposed to the proposal, a legislative committee rejected a bill Tuesday that would have repea- led the state's sales tax exemptions available to data-processing centers.

House Bill 88 would have eliminated the sales tax exemptions on various computer equipment purchased for data centers. The exemptions were first passed by the Legislature in 2010. In the short term, elimination of the exemptions would have brought Wyoming about $16 million in annual revenue, split between the state's general fund and local governments.

During the House Revenue Committee's meeting Tuesday, the bill's sponsor, Rep. Clark Stith, R-Rock Springs, described removing the exemption as "one piece of trying to fix what is a much larger structural problem with our whole tax system," arguing it was unfair that small businesses have to pay sales tax to replace their computer servers while wealthy, out-of-state companies typically use the exemption.

"I don't see that there's a reason, really, that we should discriminate against small businesses in favor of large businesses," Stith said.

Stith also noted the Wyoming Home Services program, which provides daily help to senior citizens at risk of being moved to a nursing home, could be eliminated under the budget cut proposals that the Legislature will consider when it reconvenes next week. The program costs the state roughly $2.8 million each year.

However, many who testified during the meeting, including several leaders from Cheyenne, where nearly all of the data centers in Wyoming are located, argued the proposal would drive away new technological investments in communities statewide. Cheyenne Mayor Patrick Collins noted at least 30 other states have some sort of tax exemption for data centers.

"Without this exemption, our community and state will no longer be as competitive to attract selectors that we depend on to grow this sector of our economy," Collins said. "In Cheyenne, we just zoned another five-acre business park as a site for another data center. I'm told by development people that we have $2 billion of new investment in the data center sector planned for construction in Cheyenne in the near future, and that's dependent upon this."

Laramie County Commission Chairman Gunnar Malm also testified against the bill, stating the successful efforts in Cheyenne, which culminated with the arrival of a sizable Microsoft data center in 2012, would never extend to other areas of the state if the bill were to pass. He also ran through the other revenue that comes from the data center through property taxes and sales taxes paid on electricity.

"This last year, the Laramie County Library received over $200,000 from one Microsoft data center. Our weed and pest district received $75,000, roughly. The Conservation District received $47,000. The community college here locally received $650,000. The county school fund received $567,000, and (Laramie County School District 1) received $2.5 million," Malm said. "If this repeal is to occur, those kinds of monies will not be realized in any other community ... outside Laramie County."

Betsey Hale, CEO of the local economic development nonprofit Cheyenne LEADS, said her group has been in talks with a prospective data company that is considering relocation to five other states that offer similar tax benefits.

"That one company would bring over 1 million square feet of new construction, a capital investment well north of $1 billion, and over 200 primary jobs, paying much higher than the Laramie County average annual wage," Hale said. "The opportunity costs of losing this project would be real, and would include the loss of real and personal property taxes and sales tax (on electricity) in the millions."

Testimony during the meeting was not limited to Cheyenne officials, as a few statewide organizations, including the Wyoming Business Alliance and the Wyoming Economic Development Association, were also opposed to the proposal. WBA President Cindy DeLancey told lawmakers it was important to follow through on the promise of the legislation passed in 2010.

"I deeply understand the need to diversify and look for new revenue sources," DeLancey said. "However, the larger precedent by reneging on a deal could have farther reaching consequences to business as a whole in Wyoming than the small economic gain that we might achieve by doing away with this exemption."

Lawmakers on the committee ultimately rejected HB 88 by a 6-3 vote, meaning it won't get another hearing when the Legislature reconvenes at the Capitol next week for its month-long general session.

Tom Coulter is the Wyoming Tribune Eagle's state government reporter. He can be reached at tcoulter@wyomingnews.com or 307-633-3124. Follow him on Twitter at @tomcoulter_.