The federal tax cut legislation approved by Congress in 2017 had some unintended consequences. One threatens the tax-exempt status of the cooperatives that provide electricity throughout rural Oregon, a change that could drive up costs to co-op members. Now both houses of Congress are considering fixes to the problem, and Sen. Ron Wyden, D-Oregon, the ranking Democrat on the Senate Finance Committee, can help advance the Senate bill.
It should also get support from Oregon Sen. Jeff Merkley, also a Democrat. In the House of Representatives, Greg Walden, R-Hood River, Earl Blumenauer, D-Portland, and Kurt Schrader, D-Oregon City, all have signed on as co-sponsors of the House version.
Electric co-ops are member-owned, and to maintain their tax-exempt status they must receive at least 85 percent of their revenue from their members. Funds that come as federal grants, formerly treated as income from co-op members, now must be counted as nonmember income, thanks to changes in the Internal Revenue Code.
That’s a problem.
Consider the plight of the Douglas Electric Cooperative, which serves southern and western Douglas County as well as small areas in Lane and Coos counties. It was hammered by storms in February, and the co-op faces bills of between $9 million and $10 million as a result, according to Keith Brooks, co-op manager. It is eligible for money from the Federal Emergency Management Agency that will cover part of that cost, though accepting the money could mean the loss of its tax-free status. The money would be used to rebuild infrastructure damaged in those storms.
Meanwhile, Brooks says, the co-op is trying to figure out just what would happen if its tax exemption disappeared. The uncertainty has left the co-op in a gray area he says, making planning for the future difficult, at best.
That’s where Wyden comes in. He represents a state that includes 18 rural electric co-ops and uncertainty is a problem for all of them. As the senior Democrat on the Senate Finance Committee, he can support S. 1032, the Senate version of the Revitalizing Underdeveloped Rural Areas and Lands (RURAL) Act. His office says he is looking for nonlegislative ways to correct the problem, and that’s good. But firm leadership in support of the RURAL Act can’t hurt.