It might seem straightforward for Congress to quickly approve the RURAL Act this year, given its broad support in both the House and Senate. After all, this bipartisan bill aims to safeguard electric cooperatives from potentially losing their tax-exempt status and has garnered significant backing. However, political experts highlight that navigating legislation through Congress is a far more complex process than many realize, even for seemingly non-controversial bills.
The RURAL Act is designed to rectify an unintended consequence of the 2017 Tax Cuts and Jobs Act. This previous act included a provision that jeopardizes the tax-exempt status of non-profit cooperatives when they receive government grants. These grants, intended for vital projects such as disaster recovery, broadband expansion, renewable energy development, and energy efficiency upgrades, are now counted as income. This reclassification makes it difficult for some co-ops to remain under the 15% limit on non-member revenue, a crucial threshold for maintaining their tax-exempt status. Before the 2017 law, grants were considered capital and not included in revenue calculations. The RURAL Act seeks to revert to the previous treatment of grants, excluding them from co-op income calculations once again.
Congressional specialists from Ohio and Minnesota, states represented by the RURAL Act’s Senate sponsors, Republican Rob Portman and Democrat Tina Smith, shed light on the increasing difficulty of passing legislation in today’s political climate.
The Uphill Battle for Bills in Congress
Experts emphasize that electric co-ops are not uniquely facing legislative hurdles. The reality is that Congress only approves a small fraction of the bills introduced by its members.
“On average, about 10,000 bills are introduced in a congressional session, and only around 3% to 4% are enacted,” notes Michael Minta, an associate professor of political science at the University of Minnesota. “This inherent bottleneck means that numerous well-intentioned, bipartisan bills simply do not make it through the process.”
Image: The US Capitol building, illustrating the complex legislative environment where even popular bills like the RURAL Act face challenges in becoming law.
A significant factor contributing to this legislative gridlock is the increasing political polarization within Congress. This division hinders the ability of lawmakers to collaborate across party lines, which is essential for legislative progress, according to Jack Wright, a professor emeritus of political science at Ohio State University specializing in American politics.
“The political parties began to diverge in the 1980s, and this trend intensified throughout the 1990s,” Wright explains. “The moderate center, which once included conservative Democrats and liberal Republicans, has largely disappeared. Lawmakers today are voting along party lines more consistently, making bipartisan coalitions much harder to forge.”
Bipartisan Support Doesn’t Guarantee Swift Passage
While the RURAL Act enjoys bipartisan support, the question remains: why is scheduling a vote taking so long?
Political scientists point out that it is typical for bills to be considered across multiple congressional sessions before they are ultimately passed. The RURAL Act was introduced in April, indicating it is still relatively early in the legislative lifecycle.
“Unless there is a significant crisis demanding immediate congressional action, such as the 2008 financial crisis, lawmakers generally proceed at a deliberate pace,” Minta states. “This slow and measured process is, in many ways, inherent to the design of the institution.”
The approach of an election year further decelerates the legislative process, Wright adds.
“As we move closer to the 2020 election, political considerations become amplified,” he says. “In the House, Republicans might oppose bills they would typically support, simply to prevent Democrats from claiming legislative victories. In the Senate, the filibuster rule allows even a minority of Democrats to obstruct regular legislation, despite majority support. Furthermore, external factors like the impeachment inquiry can exacerbate partisan divisions and further solidify opposing stances.”
Another potential obstacle for the RURAL Act is the lack of co-sponsorship from the chairpersons of the House Ways and Means Committee and the Senate Finance Committee, Minta suggests. These committees hold jurisdiction over tax-related legislation.
“A key predictor of a bill’s success is whether the chair of the relevant committee sponsors it,” he explains. “Chair sponsorship typically ensures a committee hearing, a markup session, and a higher probability of the bill advancing out of the chamber and becoming law. Committee chairs are usually aligned with party leadership, lending significant weight to their support.”
Rural Voters and Election Year Priorities
With the looming election year, one might expect lawmakers to seize the opportunity to pass a bill like the RURAL Act, which offers a tangible benefit to rural voters. However, the calculus is more nuanced.
According to Minta, a lawmaker’s responsiveness to rural issues depends heavily on the significance of the rural vote in their re-election prospects.
A House member representing a predominantly rural district is likely to prioritize the needs of rural constituents. Conversely, a senator representing a more diverse state might prioritize urban or suburban issues if those areas represent a larger voting bloc for them.
“Lawmakers tend to focus on the voter demographics they believe are most critical for their re-election,” Minta concludes.
The Strategy for Passage: Attaching to Larger Legislation
Given these numerous hurdles, what is the most effective strategy for passing a bill like the RURAL Act in the current Congress?
The lead sponsors of the RURAL Act have indicated that their strategy involves attaching the bill to a larger, must-pass legislative package. This could include a spending bill to prevent government shutdowns or legislation to extend expiring tax provisions.
Experts agree that this strategy represents the most viable path forward.
“We’ve observed a trend in recent congressional sessions where fewer bills are passed overall, but the bills that do pass are significantly larger in scope,” Wright notes. “This trend reflects the increased use of omnibus bills—packages combining various legislative items—as a mechanism for achieving compromises and trade-offs in an environment marked by ideological deadlock.”
Image: An advocacy advertisement for the RURAL Act, highlighting the importance of grassroots support and action to encourage congressional passage.
Further Reading on the RURAL Act:
- Co-op Voices, Part 1: How Losing Tax-Exempt Status Would Hurt Rural Residents
- Co-op Voices, Part 2: CEOs Discuss Impacts of Tax Law Glitch for Members
- Video: Curtis Wynn on the Importance of the RURAL Act
- Q&A: Senate’s Lead RURAL Act Sponsors Discuss Their Strategy for Passage
- Q&A: RURAL Act’s Lead House Sponsors Say Co-op Voices Are Key to Bill’s Success
- As Majority of House Signs On to RURAL Act, Lead Sponsors Press for Vote
- Co-op CEO to Congress: Help Expand Rural Broadband by Passing RURAL Act
- NRECA CEO Jim Matheson: ‘If We All Stand Up,’ Co-ops Can Save Tax-Exempt Status
- Co-op Advocacy Needed to Move Vital Tax Fix in Congress
Podcast Episode on the RURAL Act:
(Link to podcast episode)
