To attract tech companies building server farms, Washington state will give tax breaks to companies that build data centers in rural counties. Both sides of the state Legislature passed the tax break this week in Olympia.

Last year, the state rejected a proposed tax break, which prompted Microsoft to move its cloud computing platform Azure out of Washington state to another U.S. data center. The news was distressing to the town of Quincy, where Yahoo, Microsoft and Intuit have built large server farms, drawn to Grant County's cheap and green hydropower.

Since then, Facebook and Amazon.com have both chosen to build data centers in Oregon instead of Washington, said Patrick Boss, director of public affairs for the Port of Quincy.

The new tax exemption applies to:

• Sales of server equipment that will be installed in a data center.

• Labor and service charges for installing servers, and to sales of power infrastructure equipment.

• Sales of power infrastructure.

• Labor and services for construction of power infrastructure.

To be eligible for the break, businesses must create at least 35 family-wage jobs in a data center and provide health insurance. Data centers have to be at least 100,000 square feet to qualify and construction must begin between March 31. 2010, and July 1, 2011.

"Already in the past couple of days we’ve had a couple of companies inquiring" about building data centers in Quincy," Boss said. "The passage has definitely stimulated interest. We’re definitely excited abut being on the level playing ground with other states, especially Oregon."

The state Senate passed bill 6789 on Tuesday, by a 39-4 vote, and the house passed it by a 91-2 vote on Wednesday. Here is the link to the legislative bill history.

Here is the Microsoft blog that mentioned the tax break in 2009.