SALEM — The state Senate passed a bill Monday that answers a question on what property taxes data centers and other high-tech companies would pay and that would likely lead to new jobs in hard-struck Crook County.
It took the Senate committee working on the bill awhile to hash out language that exempts data centers operated by companies such as Facebook and Apple in Central Oregon and elsewhere from property taxes.
Senate Bill 611 had a lower profile than other bills that have taken the spotlight but would directly impact companies looking to expand Internet in Portland, and Apple and Facebook, which will likely expand their operations in Prineville and elsewhere if the bill passes.
Sens. Mark Hass, D-Beaverton, and Brian Boquist, R-Dallas, worked for the entire first month of the session to get the bill into a passable form in part because the issue is complex and in part because there’s a time element.
“The reason we’re trying to move so fast on it is there’s potential economic development in Crook County with Apple” likely adding a second data center, Hass said.
The bill deals with the concept of what’s called central assessment, or charging property taxes on the portion of value of communications, airline, oil and gas pipelines among other companies on a statewide basis.
In the late 1800s, local taxing bodies were in charge of taxing companies based on the value of the portion of a company in their district.
Local districts tended to overestimate the value of the portion of a company in their district, making the taxing question more complex. Oregon started central — or statewide — assessment to fix that.
“Central assessment would say, ‘OK, Department of Revenue, please figure out how much Burlington Northern Company is worth and then we’ll set a certain percentage of what that is worth in Deschutes,’” Hass said.
If Senate Bill 611 passes the House and receives Gov. Kate Brown’s signature, data centers wouldn’t be considered a communications company and would therefore be exempt from central assessment.
The bill also includes tax caps as a way of bringing the ultrafast Google Fiber Internet to Portland. Lawmakers say the company has so far chosen not to pick Portland and its surrounding cities for Fiber because of lingering tax questions the bill addresses by including exemptions on new qualifying infrastructure.
Crook County officials hope passing the bill quickly this session would bring more data centers into the area, which added nearly no jobs in all of 2014 while the western reaches of the state boomed. Woodgrain Millwork laid off 200 workers late last year, and county officials wrote legislators a letter showing their support for the bill.
The bill is a favorite of House Republican Leader Mike McLane, of Powell Butte, who is working to ensure quick passage of the bill so his district can bring in the relatively high-paying jobs that come from the high-tech companies.
“The taxing scheme of central assessment is broken,” McLane told The Bulletin last month. “These current tech companies with high values expose the problem. And there’s a lack of clarity of who is assessed in what scheme. This bill fixes those things.”
The bill, which co-sponsor Boquist said has three parts, also addresses taxing the intangible value of a company.
The fix has been years in the making but was tied up in a court dispute with Comcast, the telecommunications giant that challenged the state’s ability to tax its intangible property.
The League of Oregon Cities opposes parts of the bill because the state estimates local government and education districts would lose nearly $85 million in revenue through 2021 under the bill. That’s because the bill caps taxes on the intangible value of certain tech companies.
Other senators heralded the bipartisan work that led to the bill’s passing its first major hurdle.
“I would love to see some of the other controversial legislation end up just like this as a bipartisan effort,” said Sen. Tim Knopp, R-Bend.
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