On Monday, December 17 the City Council approved the City’s state legislative agenda for 2013.
I proposed an amendment to add a provision in support of considering the creation of a state investment trust, to “provide financing for housing development, public works infrastructure, educational infrastructure, student loans, and community quality of life projects.” This was passed, and added to the Economic Development section of the legislation.
Representative and Senator-elect Bob Hasegawa from the 11th District has sponsored legislation to create a Washington Investment Trust during recent legislative sessions, and obtained 44 co-sponsors in the 2012 session. The proposal is modeled on the Bank of North Dakota, the only state-owned bank in the country; the current version of the legislation has a narrowed scope to address concerns, and focuses on infrastructure financing, which can be used for, for example, utilities, schools, sewers, transportation, and broadband.
Hasegawa gave a presentation before the Housing, Human Services, Health and Culture committee I chair on December 12.
An investment trust could reduce infrastructure costs for the state, and allow local governments such as Seattle to obtain low-cost, short-term construction loans for infrastructure construction projects. This would reduce the cost of borrowing for the construction period, because the Trust could offer lower interest rates than the private bond market, with no additional costs or frees. It’s an example of streamlining government to make it more efficient, by reducing costs to taxpayers and generating a higher return on tax dollars. In addition, it would promote economic development, as short-term construction loans could be recycled in the same way that short-term loans can be recycled in the private construction market.
In the long-term, with sufficient capacity, it could provide long-term financing, with even further public savings.
The state constitution prohibition on lending of credit for private benefit; this proposal would provide for lending to public agencies only.
The Washington Public Bank Coalition has worked for creation of a state bank, and has additional information.