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Oregon Governor Tina Kotek’s proposed economic development legislation seeks a sizable expansion of the state’s tax breaks for data centers, already among the highest in the US, despite questions being raised about the value they add to the state and the drawbacks, such as the massive increase in water consumption.
More Tax Breaks Proposed For Oregon Data Centers
Property tax exemptions are currently available for up to five years for new industrial activity in urban and suburban parts of the state under the standard enterprise zone program. At almost $90 Million, tax breaks for Hillsboro’s data centers doubled last year.
Here is the baseline on how Oregon’s enterprise zone tax breaks work today and what HB 4084 proposes:
| Program | Exemption length | What it covers |
|---|---|---|
| Standard Enterprise Zone | 3 years | Local property tax abatement on new plant and equipment |
| Standard program with local agreement | 4 to 5 years total | Adds years in exchange for a written agreement and school support fee |
| Long Term Rural Enterprise Zone facilities | 7 to 15 years | Rural facility program with higher investment and hiring criteria |
| HB 4084 proposal in committee materials | Up to 7 years total | Staff summary describes added exemption years and possible further extensions via rules |
Yet the Governor has proposed that urban and suburban areas collect these incentives for 10 years, twice as long as they can under existing law, as outlined in House Bill 4084.
The bill advanced through a key committee this past week, and, if passed, Oregon data center operators will save nearly half a billion dollars in local property taxes this year through three different incentive programs.
Hillsboro data centers saved $45 million- two-thirds of all the money the program gave away statewide- in local property taxes last year through the standard enterprise zone program.
For example, a TikTok data center in Hillsboro with just 11 local employees is set to save $5.6 million this year through the enterprise zone program. This translates to over $500,000 in tax breaks per worker.
Under the new bill, participating companies, primarily data centers, will save twice as much, and more cities will be eligible to participate in the enterprise zone program, providing an incentive for data centers to expand into additional communities.
Tax Breaks For Oregon Data Centers Despite High Water Usage
Water, the natural resource under increasing pressure, is seen by some as the next flashpoint.
Data centers generally use huge amounts of water for cooling, and Oregon’s drought and groundwater limits mean communities may end up debating whether new server farms should get priority access to local water supplies.
A recent report indicated that Google’s annual water use has increased from 104 million gallons in 2012 to 434 million gallons in 2024. One of the “Big Tech” titans, Google, used 434.4 million gallons of water in 2024, or 1.19 million gallons every day.
Tidings Data Snapshot
Google data center water use in The DallesSource: City of The Dalles public records data cited by OPB reporting on Google water useDailyTidings.com
Overall, the IT giant uses a third of the water consumed by the city in The Dalles, where critical groundwater is in the Hood Basin. In most of the above restricted areas, limitations apply only to the specific aquifer.
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