By Tony Anderson
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 lawmakers like Congressman Jack Bergman.
Congressman Bergman listened to thousands of electric cooperative stakeholders as he fought tirelessly to add important legislation to the 2020 spending bill. The bill was signed into law on Dec. 20 and included a provision known as the RURAL Act, which solved an existential issue for electric co-ops and America’s rural communities.
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.
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 take the money they need to turn the lights back on for their members as quickly as possible after a disaster? Do they accept grants to help spur economic development in rural areas? 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 Congress, electric co-ops across Michigan don’t have to make those trade-offs. 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.
We at Cherryland are extremely grateful to Congressman Bergman for his support of the RURAL Act. In standing up for Michigan’s local communities, he proved that Congress still works for the people.
Thank you, Congressman Bergman. Thank you for looking out for rural communities across Michigan and thank you for working with us to solve this problem.
About the author: Tony Anderson is the general manager of Cherryland Electric Cooperative and represents Michigan as the secretary-treasurer of the National Rural Electric Cooperative Association Board of Directors.