The road to financial independence can be long, but that doesn’t discourage the cities, counties, and states leading the movement to create public banks in the United States.
In Washington State, legislators are now just three votes away from passing a bill to adopt a business plan to create a state bank. The path they took is instructive to cities, counties and other states looking to form their own banks. Watch their recent State Bank Forum here.
“I see a public bank as almost inevitable,” said State Sen. Bob Hasegawa, “because of the current financial structures we’re required to live under.”
The State Bank Caucus held an informational forum on October 9, 2018, with a panel that included state senators Bob Hasegawa, Patty Kuderer and Lisa Wellman; public finance expert John Comerford; credit union expert Hal Scoggins; and Public Banking Institute chair Ellen Brown. (Watch the panel on TVW.)
Sen. Kuderer’s presentation chronicled eight years of progress to the present, beginning in 2010, when then-Rep. Hasegawa submitted his first bill to create a state bank. Although the bill had a hearing, it failed to pass out of committee. But the innovative proposal captured the attention of the Speaker of the House, who created a task force chaired by Rep. Hasegawa.
After many work sessions, the task force drafted a new state bank bill and called the new entity the Washington Investment Trust. That bill, too, failed to advance; so Hasegawa started organizing and speaking with organizations throughout the state. He lobbied his peers and eventually his divided legislature passed budget provisos to create task forces to guide the process of proposing a public depository bank.
In 2017, a task force that included Sen. Kuderer advised the state to hire professional banking consultants to address concerns other members had raised in recent years and draft a business plan “that would move the concept forward from the theoretical to the concrete, so that legislators would have a solid idea of what they would eventually be voting on.”
The maneuver worked. Senate Bill 6375 was the first public banking bill to be advanced out of the policy committee with bipartisan support.
In another bill, SB 6032-Supplemental Budget, the fiscal Ways and Means committee committed $480,000 to assessing risk and developing a business plan for the effort. The form of the proposed bank was also modified: a bank that simply would have received the state’s tax funds as deposits evolved via Senate Bill 5464 into a “co-op” that would be open to membership not just by the state but by all “political subdivisions that have a tax base.”
That means that, if formed, Washington State’s co-op bank could generate even more credit than could be made from the state’s revenue alone, because it would have the ability to hold as deposits the combined revenues of cities, counties, ports and utility districts as well as the state itself. Each of these entities would also be able to borrow at below-market rates from the co-op bank and to leverage the tax dollars they collect.
This was always the goal, said Sen. Hasegawa, but the budget proviso stated it explicitly. The bill committed to addressing all concerns raised both by the task force and in a public hearing.
The business plan is due no later than June 30th of 2019, and legislators expect to vote on the bill no later than 2020.
Washington’s public banking advocates “didn’t get discouraged by setbacks,” said Ellen Brown. “They used objections to make the plan better. And it’s working. They’re further along than everyone else.”
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