Vinita – The Grand River Dam Authority is reinforcing its support of tax-exempt financing as a tool by which state and local governments can finance critical infrastructure, including electric utility systems.
At its May 8 meeting, the GRDA Board of Directors passed a resolution supporting the preservation of tax-exempt bonds; something many other publicly-owned utilities across the nation have also done.
“Whereas the benefits of lower capital costs are reflected in lower electric rates which benefit under-served citizens and promote rural economic development through greater local investments and control,” states one part of the resolution, which received unanimous support by the GRDA Board.
According to GRDA Chief Executive Officer/Director of Investments Dan Sullivan, GRDA is taking this action in response to proposed changes coming out of Washington, D.C.
“As congressional leaders and the White House look for a long-term strategy to cut spending and reduce the federal deficit, they should consider carefully the impact that tax changes on municipal bonds would have on investment in infrastructure, wrote Sullivan in a March 2013 editorial. “While intended to limit the benefit of the municipal bond interest exemption for higher-income taxpayers, proposals to cap the tax-exemption would actually increase the cost of infrastructure investments by state and local governments and other municipal entities, including publicly owned electric utilities like GRDA.”
That would be a difficult problem for these entities, which must rely on tax-exempt bonds as the only real tool to access capital to build critical infrastructure and community projects.
“Such bonds are what made GRDA’s current electrical generation facilities a reality over 30 years ago,” said Sullivan. “Without tax-exempt financing, it would not have been possible to meet the growing needs of our electric customers across Oklahoma.”
With the GRDA Board’s approval of the resolution, the utility joins others across the country, along with the American Public Power Association (APPA) and the Large Public Power Council (LPPC) in bringing greater focus to this issue. Sullivan added that GRDA’s municipal customers may also consider passing similar resolutions.
Headquartered in Vinita, GRDA is Oklahoma’s state-owned electric utility; fully funded by revenues from electric and water sales instead of taxes. GRDA’s low-cost, reliable electricity – produced by a diverse and beneficial mixture of coal, hydroelectric, gas and wind resources – touches 75 of 77 Oklahoma counties. At no cost to taxpayers, GRDA also manages 70,000 surface acres of lakes in the state, including Grand Lake, Lake Hudson and the W.R. Holway Reservoir.
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