Public banks and sanctuary cities: local finance for better decision-making?

Post-election, Donald Trump has threatened sanctuary cities—municipalities that have formally stated they will not detain individuals for violating federal immigration laws—with the loss of federal funding. Santa Fe is one such city facing the potential loss of 2% of their budget, about $6 million. In an NPR interview, Mayor Javier Gonzales said the loss would be “difficult to absorb,” but they will if they have to, out of respect for a 400-year tradition of welcoming immigrants. In Massachusetts, Somerville’s mayor has voiced similar sentiments, facing a 3% cut. But other Massachusetts cities will be possibly losing higher percentages, and with smaller tax bases, will really struggle to balance budgets.

Proponents of sanctuary cities emphasize that letting local or state police do their jobs—a job that requires cooperative interaction with all community members—without also having to do the job of federal immigration investigators is simply common sense. This is why after the election, police chiefs in cities across the country pledged to stand behind sanctuary city policies.

So is there a way to respect local sanctuary status without breaking a municipal budget? As Matt Stannard and Mark Armstrong of the Public Banking Institute have pointed out, public banks could help meet budget shortfalls by reducing debt costs and paying interest directly back to state (or city) treasuries, and by directing credit toward projects, sectors and services that will have the biggest positive impacts on local economies.

It turns out that many sanctuary cities “have strong movements for public banks…Public banking movements exist in San Francisco, Los Angeles, Portland (Ore.), Denver, Washington D.C., New York City, and Seattle, as well as in states like New Jersey and Vermont, which contain sanctuary cities.”

Public banking is a good idea regardless of how a city or state uses the money they save. For cities looking to preserve local autonomy on any issue—from policing to environmental monitoring and remediation to alternative energy—a public bank could, as Stannard and Armstrong write, “provide a financial foundation for municipalities charting their own courses in the face of an aggressive national executive.”

 

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