Help pass the public bank

Senate Bill 5188, concerning the creation of the Washington state public bank, has now been renamed “creation of the Washington state public financial cooperative." The substitute bill now in the rules committee is different than the original bill but is still a valuable tool for local governments. It would establish a cooperative in which local jurisdictions and the state could pool their resources and competitively finance a broad array of public infrastructure and economic development projects, including housing, at competitive rates with low administrative costs.

The public financial cooperative would have much lower operating costs than the private banking system, thereby lowering the cost of borrowing. It would also provide greater transparency and public accountability as a public institution than the private banking system allows.

The bank would finance itself by issuing its own bonds. These would not be supported by the credit of the state or impinge on the state’s debt limit. It would adopt stringent credit protection measures that would a) allow it to achieve an excellent credit rating, so as to b) pay low interest on the bonds that it issues, and c) protect it against failure.

Infrastructure in Washington state is under-financed. If enacted, this measure could expand the capacity to fund planning, acquisition, construction, repair, replacement, rehabilitation, or improvement of streets and roads, bridges, water systems, storm and sanitary sewage systems, solid waste handling, communications systems, housing, and other public infrastructure and economic development projects. An important part of the bill directs that after five years, 35% of the bank’s loans each year should finance housing in low- to medium-income areas.

This bill is consistent with the League’s privatization position, which states that core services, functions and assets critical to the well-being of the people should remain with government and not be transferred to the private sector.

Although amended to be a more limited bank than originally contemplated, this bill would be a net gain for the public in Washington state, and your support is needed to get it passed by the Senate in the next week. Please ask your Senator to ask that SB 5188 be moved from the rules committee to the floor and then vote YES for SB 5188.