At $1 billion, Amazon’s Oregon subsidy is largest known in company’s history

May 19, 2023

Public got just ONE day’s notice before final vote


Data Server Rack Center
Source: rcphotostock

Washington, DC — Good Jobs First today denounced an award of $1 billion in tax breaks to, Inc. from a rural community of 13,000 residents in northeastern Oregon.

In a local enterprise zone award from the city, county and Port Authority of Morrow, Ore., five Amazon Web Services (AWS) cloud-computing data centers will avoid $1 billion in property taxes.

It’s the largest known economic development subsidy award in Amazon’s history. Amazon hasn’t said how many jobs it will create, but the program under the tax breaks were approved requires just 10 jobs per project. AWS is the world’s largest cloud-computing provider and Amazon’s largest profit center.

Morrow residents got only ONE day’s notice before the final vote of approval was taken.

“With this new award, we now know of $6.1 billion in subsidies given to Amazon in the United States alone,” said Good Jobs First senior analyst Kasia Tarczynska. “No other retailer in U.S. history has come anywhere close to such enrichment at public expense.”

“In a 2016 study looking at major internet companies and their data center subsidies, we found a cost per job of almost $2 million,” said Greg LeRoy, Good Jobs First executive director. The AWS grab in Morrow could be several times that. At these obscene costs, the only clear outcome is a massive transfer of wealth from Oregon taxpayers to Amazon shareholders.”

Good Jobs First also noted several potential conflict-of-interest issues, flagged by The Oregonian reporter Mike Rogoway. The Oregon Government Ethics Commission is currently investigating the dealings of two port commissioners, Jerry Healy and Marv Padberg, who with a former county commissioner own Windwave Communications, a company that provides fiber-optic services to existing Amazon data centers in Morrow County.

In exchange for the $1 billion in property tax breaks over the next 15 years, Amazon will be off the hook for about three-quarters of what it would otherwise pay, and what other businesses and residents pay.

Worse, data centers create few jobs. One public official who approved the deal admitted he had no idea how many jobs the data centers would create.

Though Amazon is known mostly as a retail company, its most profitable division has been Amazon Web Services (which operates globally and also has large U.S. government contracts).

In the same way Amazon had to build warehouses across the country to meet Prime rapid-delivery targets, it must also open data centers to handle the rapid growth in cloud computing. And Oregon is an established data center cluster, with cheap hydro power for power and cooling (electricity is data centers’ biggest operating expense; Amazon just helped kill a bill that would have forced it to wean off fossil fuels), and geologic and meteorological stability.

Oregonians should not pay Amazon to do what it would do anyway.

The state’s Enterprise Zone program, under which this massive subsidy was approved, is being redesigned by Oregon’s legislature. Such state laws were first enacted long before such extremely capital-intensive workplaces such as data centers existed. To modernize EZs for today’s economy, we recommend a per-job cap of $5,000.  And then with Job Quality Standards, 60 days’ advance public notice before approval, and consumer protections against electricity rate hikes due to any demand-crowding effects.