How is a data center like a tractor? Supporters of past failed attempts to exempt data center equipment from sales taxes will be trying another tactic in the upcoming legislative session: Equating data center equipment to agricultural and manufacturing equipment.

Proponents of the exemption say that it would attract data centers to Idaho, noting that surrounding states such as Nevada, Oregon, and Washington – all with cheap power – now house a number of them. Washington, Nevada, and Wyoming all have such an exemption, while Oregon and Montana have no sales tax.

Tax incentives are second only to cost of power in determining where to site data centers, said Ken Kremer, chief operations officer for Involta LLC, a Cedar Rapids, Iowa-based company with 14 data centers across the U.S. The company recently expanded its Boise data center, which it first built in 2014. (See box.) Several of the company’s other data center sites, including Minnesota and Ohio, have such exemptions, he said, noting that his Boise facility had lost some deals because Idaho didn’t have that exemption. “When you’re talking about tens of millions of dollars in equipment, it makes a big difference,” he said.

Two years ago, a bill to exempt data center equipment from sales taxes passed the Idaho House by a single vote, but didn’t make out of the Senate Local Government & Taxation Committee. Last year, an identical bill didn’t even get printed. Idaho Director of Commerce Bobbi Jo Meuleman had indicated earlier this year that future efforts might come from industry itself rather than from Commerce.

That’s what’s happening. The Idaho Technology Council’s public policy committee — headed by Jayson Ronk, director of state government affairs for Micron — is working with companies such as data center providers Fiberpipe and Involta, as well as utilities such as Idaho Power, with the goal of putting forth legislation for the upcoming legislative session, said Heidi Jarvis-Grimes, vice president of development for the ITC. The working group’s next meeting is scheduled for August 23.

The group is working with the lobbying firm Kestrel West on the legislation, which is not yet written, said John Foster, partner of the Boise-based company. “There’s a lot of drafts floating around,” he said. “We work on broad concepts with legislators, and then draft it.”

Foster wouldn’t say which legislators or committees the group was targeting, but noted that there would be a number of personnel changes in the upcoming legislative session — including a new governor. Revenue bills are required to come from the House. Revenue and Taxation chair is now Gary Collins, R-Nampa, and Business chair is now Vito Barbieri, R-Dalton Gardens, both of whom are running in November; Environment, Energy, and Technology chair Dell Raybould, R-Rexburg, is not.

Conceptually, the bill would give a broad variety of companies, not just data centers, a sales tax exemption on computer equipment, supporters said. They hope that by crafting the exemption more broadly than just to household names such as Apple, Facebook, Google, and Microsoft – all of which are thought to be able to afford to pay sales taxes on their equipment – they will generate more support in the Legislature. Continuing growth is also a factor, Jarvis-Grimes said. “As the economy grows, we see an opportunity we didn’t have before,” she said.

Their argument is that industries such as agriculture and manufacturing have tax exemptions on the “midstream” equipment used to create their end products, which are taxed, and that companies that use data centers to help create their end products should have the same tax benefits. The bill may also have other sideboards, such as a ceiling on the total amount of tax exemption granted, Foster said.

Whether such a strategy will work is another question. The Legislature has shown increasing reluctance to grant tax exemptions in recent years. On the other hand, the improving economy and a new set of legislators may change things.