Bipartisanship seems to be more of a concept than a reality these days in Washington, D.C., the lopsided party-line votes on the two articles of impeachment against President Donald Trump being only the most prominent example.
It’s refreshing, then, to see that Congress remains capable of passing sensible legislation with broad support from both parties.
A recent case in point — last week’s passage of the RURAL Act, which Trump is expected to sign — was an important victory for Oregon Trail Electric Cooperative and its 31,000 members in Baker, Union, Grant and Harney counties.
This bill corrects a flaw in the 2017 federal tax cut law that even its proponents concede wasn’t intended.
The issue is the tax-exempt status of member-owned electric cooperatives such as OTEC. That tax-exempt status saves the cooperative about $1 million annually that it would otherwise have to pay in state and federal taxes, said Anthony Bailey, OTEC’s chief financial officer.
“We’d just as soon return that money to our members in capital credits refunds,” Bailey said.
Indeed, OTEC returned $3.5 million in such refunds to its members this month.
To maintain tax-exempt status, OTEC and other cooperatives must receive at least 85% of their revenue from members. Prior to the 2017 tax bill, cooperatives could count, as member revenue, money they received from federal grants — for instance, money from the Federal Emergency Management Agency to help make repairs to power lines following a wildfire, snowstorm or other natural event.
But the 2017 bill changed that, requiring cooperatives to count federal aid of that sort as nonmember revenue. Bailey said that for OTEC, the new law meant that if it received more than about $6 million in federal revenue in a given year, it would have to either take the money or lose its tax-exempt status and thus incur the approximately $1 million in tax liability.
Although Bailey said natural disasters such as fires are worrisome because they’re unpredictable, those aren’t the only circumstances in which a cooperative might avail itself of federal money. Another example is using federal dollars to expand broadband service or other infrastructure designed to improve standards of living or rural economies.
That this effect of the 2017 tax cut was unintended is reflected in the level of support for the RURAL Act, including by Oregon’s congressional delegation, which is made up of Democrats and one Republican, Greg Walden, whose district includes OTEC’s service territory.
Both parties recognized that the federal government shouldn’t force member-owned cooperatives to decide between accepting federal aid to make repairs after a disaster, and maintaining the tax-exempt status that helps keeps their electricity rates down.
— Jayson Jacoby, Baker City Herald editor