Oregon would temporarily bar expanded tax benefits for data centers under changes to governor’s bill

Published 9:45 am Tuesday, March 3, 2026

The governor’s economic stimulus bill expanding property tax exemptions in standard enterprise zones has been criticized as a boon for data centers

Newly built data centers could be temporarily exempt from Gov. Tina Kotek’s hotly-debated economic stimulus bill that would double the length of property tax exemptions for industries investing in Oregon infrastructure and jobs in urban and suburban “enterprise zones.”

Under an amendment to Kotek-backed House Bill 4084 proposed on Monday by Rep. Nancy Nathanson, D-Eugene, new data centers would not qualify for at least a year for the expanded benefits that change the current five-year property tax exemption to 10 years under the state’s decades-old enterprise zone program. Under the program, businesses are incentivized to set up shop and boost local hiring in select zones across the state, in exchange for a complete property-tax exemption for a set number of years.

The proposed year-long pause for data centers is primarily so Kotek’s new Data Center Advisory Committee — which has met only once since the governor formed it in January — can weigh in with recommendations before the long 2027 legislative session, Nathanson said in the Joint Subcommittee on Capital Construction, a catchall committee where bills still alive but in need of work can be heard and amended.

The bill passed the committee, and later passed the budget-writing Joint Ways and Means Committee with Sen. Janeen Sollman, D-Hillsboro, in opposition. It now goes to the full House.

Sollman said she could not support the bill after she was recently pressured to remove expanded enterprise zones from her own economic development bill to expand industrial development in Washington County. Her bill, which critics said would largely benefit data centers, appears to be on life support in the Senate Committee on Finance and Revenue.

The amendment also addresses concerns from bill critics that data centers have become the primary beneficiaries of the state’s enterprise zone tax incentives, while putting extraordinary demand on Oregon’s electricity, land and water resources. Enterprise zone tax breaks, a lack of statewide sales tax, as well as the relatively clean, cheap hydroelectricity in the region have laid the groundwork for Oregon to become among the nation’s largest data center markets.

In the most recent tax year, companies owning data centers received two-thirds of the $68 million-worth of tax breaks offered from the state’s Standard Enterprise Zone program, according to recent reporting from The Oregonian, though they make up less than 10% of the 155 companies participating in the program.

Using data from Washington County, The Oregonian also reported that the top 11 tech company-owned data centers in Hillsboro each employ, on average, about 26 full-time employees, casting doubt on the program’s efficacy as a jobs creation incentive. Those companies in the current tax year will receive $7.6 million each in property tax breaks, or roughly $294,000 per employee.

Kotek spokespersons last week told the Capital Chronicle they were aware of concerns that the bill would be a giveaway to data centers but that the governor wanted the bill to be “intentionally broad and comprehensive, not targeted at any single community or industry.” They were not supportive at the time of any amendments that would exempt data centers or crypto-mining facilities.

During a late February news conference, Kotek said she didn’t believe the bill would lead to new data centers. “My bill does not create more data centers,” she said.

Kotek spokesperson Anca Matica said in an email that the governor convened her advisory committee to “develop actionable legislative and executive recommendations to approach statewide conversations.”

“HB 4084 expands the economic opportunity tools local jurisdictions have been requesting, not for any single industry or community, but for all of them,” Matica continued.

Business groups and construction and electrical workers unions spoke against Nathanson’s amendment Monday, saying data centers provide good jobs and wages in the construction and maintenance phases, at a time when many are out of work.

Republicans on the capital construction committee, including Sen. Mike McLane, R-Powell Butte, said data center concerns were a western Oregon problem stymying development in central and eastern Oregon.

“Once again, disputes in the Willamette Valley are like a rock in a mud puddle, and it splashes those of us who live east of the mountains. I’m growing weary of this,” he said.

But the amendment, and the expansion of the Standard Enterprise Zone benefits would almost exclusively impact areas west of the Cascades, not rural central and eastern Oregon. In those rural areas, companies running data centers have cashed in on Long Term Rural Enterprise Zones that come with property tax breaks for up to 15 years.

Nathanson characterized her proposed amendment to Kotek’s bill on Monday as a “pause” for data centers in urban and suburban enterprise zones until better solutions to data center concerns — including financial incentives — can be worked out in the long, six-month legislative session next year.

“Data centers are a hot topic nationally,” she said. “Let’s consider this very carefully. Instead of an outright prohibition, one size fits all, applies everywhere, all the time, and doing something really fast this session, let’s take a pause. Let’s consider all the factors and come back and address this next year.”

This article was originally published by Oregon Capital Chronicle and used with permission. Oregon Capital Chronicle is part of States Newsroom and can be reached at info@oregoncapitalchronicle.com.