Microsoft is moving some of its compute power out of Grant County in Washington state after the Legislature declined to make a change in tax law.

The move, announced on Microsoft's blog for Windows Azure, was first spotted by TechFlash yesterday.

"Due to a change in local tax laws, we’ve decided to migrate Windows Azure applications out of our Northwest data center prior to our commercial launch this November," Microsoft said on its the blog.

Several other technology companies such as Yahoo have built data centers, buildings filled with servers that power the Internet, in Grant County, drawn to the attractive electricity rates and land prices.

In 2008, Microsoft spent $3.4 million on electricity in Grant County, and the company has yet to launch Azure, it's cloud computing platform. Many technology companies are launching products in the cloud, which would allow businesses to outsource software and hardware to companies like Microsoft to run in remote locations.

Here is a story we wrote on how tech companies have been building data centers in Grant County, and better explains why companies need these sprawling server farms.

I have some calls out to track down more details about the tax proposal.