By Chris Perry
Washington politics have become so polarized that it can be tough for Democrats and Republicans to come together to tackle big challenges. But that’s exactly what happened recently on Capitol Hill thanks to dedicated Kentucky lawmakers like Senate Majority Leader Mitch McConnell and Congressmen John Yarmuth, Hal Rogers, Brett Guthrie, James Comer and Andy Barr.
These legislators hail from different parts of the commonwealth and represent different political parties and ideologies. But each of them listened to the concerns of electric cooperative stakeholders who spoke up about a critical need for America’s rural communities. The 2020 spending bill signed into law included a provision known as the RURAL Act, which solved an existential issue for electric co-ops.
As we explained to Kentucky’s congressional delegation, electric co-ops work to secure government grants to help pay for numerous activities that benefit the communities they serve. These include grants for storm recovery, renewable energy and economic development.
Without the passage of the RURAL Act, if Kentucky co-ops faced another weather disaster like the 2009 ice storm, federal disaster aid could have jeopardized their tax-exempt status. Co-ops are not-for-profit utilities that rely on this business model to be able to serve their rural communities.
In order to maintain their tax-exempt status, co-ops can receive no more than 15 percent of their income from non-member sources. Historically, government grants to co-ops were counted as contributions to capital. But due to a glitch in the 2017 tax law, government grants were reclassified as income, pushing some co-ops beyond the 15 percent threshold and jeopardizing their tax-exempt status.
The tax problem left co-ops with an unfair choice: do they accept the federal aid they need to turn the lights back on for their members as quickly as possible after a disaster? Or do they turn down those grants so they wouldn’t have to spend their members’ money paying taxes rather than improving service?
Thanks to our elected leaders, electric co-ops across Kentucky don’t have to make those tradeoffs. When we raised these concerns, they listened and took the time to understand the consequences of this issue. This is good news for both co-ops and their members because some co-ops would have had to raise their electric rates to pay new taxes.
In standing up for Kentucky’s local communities, these lawmakers proved that Congress still works for the people. Notably, the legislation drew the bipartisan support of more than 300 representatives in the House and more than half of the Senate before it was passed. That’s a rarity in Washington these days.
In today’s fast-paced society, pausing to give thanks is done with increasing rarity. That’s unfortunate.
Thank you, Sen. McConnell, and Reps. Barr, Comer, Guthrie, Rogers and Yarmuth. Thank you for looking out for rural communities across Kentucky and thank you for working with us to solve this problem.
Chris Perry is president & CEO of the Kentucky Electric Cooperatives