WA State Considering Getting Into The Banking Business?
Across Washington state, many cities and counties rely on what's called the Public Works Assistance Account to obtain funding to help with infrastructure projects. However, as those remain underfunded, and continue to slip behind, one Democratic lawmaker has a solution.
Democratic lawmaker proposes creating a 'state bank'
According to The Center Square:
"If passed, SB 5509 sponsored by Rep. Patty Kuderer, D-Bellevue, would add a public state bank to the more than 80 programs within 12 state agencies that provide financial support to local governments."
The idea of a public bank would reportedly allow funding for these projects to be 'independent' from typical state budget debt, but also raises a lot of questions.
The bill would, by law, prohibit the bank from creating debt. And, it would require its funds to be separate from other public money. The bank would be overseen by a nine-person board, three of them appointed by the Governor, and be operated by the WA State Treasurer's office.
How would it get going?
It would require seed money to get it off the ground. According to The Center Square:
"SB 5509’s proposal differs from the Bank of North Dakota, the only public bank still operating in the country, in that the bank would not receive state revenue and its funds would be kept segregated. Instead, it would be established with “seed money” from a combination of state and federal funding “sufficient to allow the state to issue debt with a competitive rating” in order to issue debts to cities and counties."
The Center Square reports, as do other sources, other cities and states have considered but not adopted such a public bank plan. They include the state of Hawaii, Main, Vermont, Massachusetts, and even Oregon as well as the cities of San Francisco and Santa Fe New Mexico.
One of the biggest fears of such as a bank is that if it were to become insolvent or 'go under,' that, unlike a private bank, taxpayers would be potentially responsible for a bailout with taxpayer money.
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