The 2017 law counts grants as income, making it hard for some co-ops to avoid going over the 15% limit on non-member revenue that they must maintain to remain tax-exempt. Previously, grants were counted as capital and did not factor into co-ops’ revenue ratios.
The RURAL Act would once again exclude grants from counting as co-op income.
Congressional experts from Ohio and Minnesota—the home states of lead RURAL Act Senate sponsors Rob Portman, R-Ohio, and Tina Smith, D-Minn.—talked about why it has become increasingly tough for lawmakers to pass bills:
Now that the RURAL Act is supported by more than two-thirds of the House and nearly half of the Senate, it may seem like it should be easy for Congress to quickly pass the popular bipartisan bill this year and protect electric cooperatives from the risk of losing their tax-exempt status.
But political scientists say pushing legislation through Congress is much more difficult than most Americans think—even when a bill isn’t considered controversial.
The RURAL Act is a simple, one-page bill that would fix a problem created by the 2017 Tax Cuts and Jobs Act. That sweeping bill contained a provision that threatens the tax-exempt status of not-for-profit co-ops anytime they accept a government grant for disaster recovery, broadband service, renewable energy, energy efficiency or other priorities.
Why is it so hard for Congress to pass a bill that is overwhelmingly popular and bipartisan?
Co-ops shouldn’t feel singled out, experts said. The reality is that Congress passes only a tiny fraction of the bills that its members introduce.
“About 10,000 bills are introduced on average in a session of Congress, and only about 3% to 4% are passed,” said Michael Minta, an associate professor of political science at the University of Minnesota. “That’s a big barrier right there. If the percentage of bills being passed is that small, there are going to be some really good bipartisan bills that aren’t passing.”
Congress has also become increasingly polarized, hampering lawmakers’ ability to work together across party lines to get things done, said Jack Wright, a professor emeritus at Ohio State University who specializes in American politics.
“The parties began to separate in the 1980s, and the trend really escalated throughout the 1990s,” Wright said. “Where there used to be quite a few legislators in the middle—conservative Democrats, for example, or liberal Republicans—that is no longer true. Legislators of both parties are voting the party line with greater regularity, making cross-party coalitions much harder to form.”
But there is a bipartisan coalition on the RURAL Act. So why is it taking Congress so long to schedule a vote?
It’s common for bills to be considered in several sessions of Congress before they are passed, the political scientists said. The RURAL Act was introduced in April.
“Unless there’s a major crisis, like the financial crisis in 2008 where Congress had to act, lawmakers take their time,” Minta said. “It’s really the way the institution was designed.”
The process slows down even more in an election year, Wright said.
“We are just coming into that with the 2020 election,” he said. “In the House, Republicans may oppose bills that they would ordinarily support if it means giving the Democrats something they could claim credit for. In the Senate, regular legislation is still subject to the filibuster, which means that a few Democrats can hold things up, even when there is majority support. And on top of all of that, the impeachment inquiry has hardened positions on both sides.”
The RURAL Act also may be slowed by the fact that neither the chairman of the House Ways and Means Committee nor the chairman of the Senate Finance Committee are co-sponsoring the bill, Minta said. Those committees have jurisdiction over tax issues.
“It seems like the biggest factor that predicts bill passage is if the chairman of the relevant committee sponsors the bill,” he said. “The bill will get a committee hearing and a markup and has a higher likelihood of passing out of the chamber and becoming law. The chairmen are usually in tune with the leadership, which gives their support greater weight.”
With an election year rapidly approaching, why aren’t lawmakers jumping at the chance to pass a bill that gives them something positive to tout to rural voters in 2020?
It all depends on how much a House member or senator needs the rural vote to win re-election, Minta said.
A House member who represents a heavily rural district is likely to be very responsive. However, a senator who represents a diverse state may prioritize urban or suburban issues over rural ones if he or she gets more votes from those areas.
“They’re going to focus on the voters that they believe are most likely to turn out for them,” Minta said.
Given all the obstacles, what’s the best strategy to pass a bill in this Congress?
The RURAL Act’s lead sponsors say their strategy is to attach the bill to a bigger piece of legislation that Congress feels compelled to pass, such as a spending bill to keep the government open or legislation to extend expiring tax breaks.
That strategy is probably the best way to go, the experts said.
“We’ve seen a trend over the past several Congresses where fewer bills are passed overall, but those that are passed are much larger,” Wright said. “In short, there are more omnibus bills—various things packaged together—as a way of making trade-offs and deals because of the ideological impasse.”