(The Center Square) – State lawmakers narrowly passed a bill on the last day of the legislative session that eliminates a tax exemption for data center replacement equipment, despite bipartisan opposition.
Senate Bill 6231 would have repealed the tax exemption for data centers entirely, but the version passed Thursday narrowed the scope. The state House passed it by a 51-46 vote, with eight Democrats siding with Republicans. The Senate passed the bill last month by a 26-23 vote, with four Democrats against.
Eliminating the exemption was a key part of the Democrats’ plan to push through a $2 billion spending increase. Republicans pleaded with their counterparts to reject SB 6231 because it could affect eastern and central Washington communities experiencing significant economic growth from new data centers.
“This is a union building trade job killer for Washington state,” said Rep. April Connors, R-Kennewick.
Rumors spread on Thursday that Democrats might not have enough votes to pass SB 6231, which the operating budget relied on. Republicans argued on the House floor that the Legislature could reject the bill and still pass the budget by trimming the $2 billion spending hike or making additional reductions.
According to a fiscal analysis, repealing the tax cut will generate $200 million over the next four years.
“I would have been deeply concerned if that had not been adopted,” Gov. Bob Ferguson told reporters after the session ended Thursday, when asked if SB 6231 failing would’ve necessitated a special session.
The majority party was able to muster up the votes just in time, repealing the tax exemption for data centers before quickly passing the operating budget. House Speaker Laurie Jinkins told reporters after the session wrapped up that it came down to talking through the issue with members to pass the bill.
“We didn’t think after Tuesday night that we would have the time to talk through that bill with people,” Jinkins said during a Democratic media availability, “and we did, and that’s what helped us get there.”
Senate Majority Leader Jamie Pedersen said he expects data centers to be a focus for the Legislature moving forward as it balances economic development with concerns over the energy prices. Rep. Alex Ybarra, R-Quincy, used his own community as an example of what’s at risk by repealing the tax incentive.
A state workgroup released a study in December noting that data centers have led to 900 direct jobs in Quincy, higher property values, lower tax levy rates and more. The study found that tax incentives, such as the one SB 6231 eliminated, and the surrounding regulatory climate were among the key siting factors.
“They create jobs,” Ybarra said. “Thousands of jobs: electricians, mechanics, linemen, you name it.”
“That tax incentive means we can buy equipment and we have more of those folks,” Ybarra continued. “If this tax incentive goes away, the jobs go away. Union jobs — union jobs that have been there since 2008, they will be gone — they will be gone because the data centers are going to go somewhere else.”
According to CBRE, the world’s largest commercial real estate group, Washington state set records in data center leasing activity in both 2024 and 2025. The “Central Washington inventory nearly doubled in 2025, making it the eighth-largest data center market in North America,” a news release explained.
Rep. Jim Walsh, R-Aberdeen, and chair of the Washington State Republican Party, said the passage of SB 6231 could push data centers to Virginia, Mississippi and Tennessee. Those states are among many that still offer tax cuts that could attract data centers when it comes time to replace their equipment.
Their departure would have ripple effects, as economic development in eastern and central Washington has led to growth across other business sectors as well. Walsh said Democrats in Olympia are sending a message that they don’t want data centers, as that industry booms across much of the country.
“Did they skinny it down some? Yes,” Walsh told The Center Square when asked about the narrowed scope of the proposal. “That is the scope of the broken promise here, but it’s still a broken promise.”
