H3543 reporting deadline extended

On Monday, May 9, the Massachusetts House adopted an extension order H 4383 by Rep. Aaron Michlewitz granting the Joint Committee on Financial Services until Wednesday, May 9 to make its final report on H3543, establishing the Massachusetts infrastructure bank. So the public has about a month to reach out to the committee and show their support.

Mayors, city council members, town or city managers, planning or economic development or project board members—we need you! Please contact the chairs of the Joint Committee to let them know the importance of lower-cost financing for the projects that you have done or wish to do in order to improve quality of life for your municipality’s residents.

Voters, if your state Senator or Representative is a member of the Committee, please give them a call as well.

You can find names and contact info, as well as some background on the legislation, in this post.

You can access the bill text here.

We have posted some supporting information on the bill, including a look at the difference between an infrastructure bank and revolving loan funds, how the bank could help build resilience in the face of climate change, and a look at similar campaigns in other states. We are also happy to answer your questions, so please contact us.

Calls and emails in support of H3543 needed!

Good news! H3543 has been moved to the Joint Committee on Financial Services. We have an historic opportunity to pass legislation to start the first state public bank in the U.S. since 1919!

H3543, creating a Massachusetts public infrastructure bank, will give Commonwealth cities and towns an economical alternative to fund infrastructure projects. With twenty other States and cities pursuing public banks as well, we hope such a move will also strengthen their efforts.

Lower-cost financing means that cities and towns will have more money for education, vital services, and local quality of life amenities. Your city or town can save as much as 35%-50% on the cost of a new school, bridge, water treatment facility, health and public safety IT systems, agriculture, forestry and accessibility improvements, bike lanes, or other projects.

It is also a forward-looking green bill that will enable towns and cities to prepare for and mitigate the consequences of climate change. The bank does all this, whenever invited, in partnership with local, community banks and credit unions. There is no competition with local banks as the Massachusetts Infrastructure Bank is not a retail bank and handles only public money.

“Hold on” some might say, “then won’t my state taxes go up?” This might be true to support a revolving loan fund (sometimes erroneously called a “bank”) that will require re-appropriations to expand. But new taxes are not needed for a chartered, infrastructure public bank that will achieve profitability within two to three years and then use these profits to increase support for needed projects.

The Massachusetts Public Bank will be set up to serve the needs of all Commonwealth residents, be insulated from political influence, and be independently and regularly audited. The Massachusetts Infrastructure Bank will offer secure protection for public deposits, as it will never invest speculatively in derivatives. Its fiduciary responsibility is to the people of Massachusetts.

Please take a moment to contact the House and Senate Chairs of the Joint Financial Services Committee listed below. Other members of the committee are listed as well, so if you are a constituent, please call them as well.

While we have legislative support, we only have 10 days to influence it being reported favorably out of the Committee. So please, go for it! Make a call or send an email today.

Here’s a script:
I’m writing to ask you to ensure that H3543, creating the Massachusetts Infrastructure Bank, is reported favorably out of the Joint Committee on Financial Services. Our municipalities and taxpayers need reliable, cost-effective financing that allows us to plan for the future, improves our daily lives and puts people to work across the Commonwealth.

Chairs of the Joint Financial Services Committee

House Chair: Representative Aaron Michlewitz (617) 722-2220  Aaron.M.Michlewitz@mahouse.gov

Senate Chair: Senator James Eldridge  (617) 722-1120  James.Eldridge@masenate.gov

Other Members of the Joint Financial Services Committee–if you are a constituent, please call or email!

Vice Chair: Representative Michael J. Finn  (617) 722-2220  Michael.Finn@mahouse.gov

Vice Chair: Senator Eric Lesser  (617) 722-1291  eric.lesser@masenate.gov

Senator Joseph A. Boncore  (617) 722-1634  Joseph.Boncore@masenate.gov
Senator John F. Keenan  (617) 722-1494  John.Keenan@masenate.gov
Senator Sal N. DiDomenico  (617) 722-1650  Sal.DiDomenico@masenate.gov
Senator Viriato M. deMacedo  (617) 722-1330  Vinny.deMacedo@masenate.gov
Representative Thomas M. Stanley  (617) 722-2230  Thomas.Stanley@mahouse.gov
Representative Chris Walsh  (617) 722-2070  Chris.Walsh@mahouse.gov
Representative Marjorie C. Decker  (617) 722-2692  Marjorie.Decker@mahouse.gov
Representative Christine P. Barber  (617) 722-2210  Christine.Barber@mahouse.gov
Representative Michael S. Day  (617-722-2210  Michael.Day@mahouse.gov
Representative Jose F. Tosado  (617) 722-2464  Jose.Tosado@mahouse.gov
Representative Daniel Cahill  (617-722-2020  Daniel.Cahill@mahouse.gov
Representative F. Jay Barrows  (617) 722-2488  F.JayBarrows@mahouse.gov
Representative Shawn Dooley  (617) 722-2810  Shawn.Dooley@mahouse.gov

You may also want to let your own state legislators know about your support for the bill. You can find their contact info here.

Finally, contact your mayor or town manager. You may wish to remind your mayor that the current bond market charges 4.5% or 5% bond interest for AAA rated cities and towns. If a town has over 6% of its annual budget allocated to debt service, they are often charged exorbitant rates of 13% and up. This raiding of public treasuries must stop. Why should we taxpayers pay more for necessary improvements to our lives?

Ask your local public officials to please contact their Representatives and Senators and members of the Joint Financial Services Committee asking them to favorably consider H3543.

And if you have questions about this bill, please contact us!

 

Bill update

Our bill has been reported out of the  and sent to the Joint Committee on Financial Services. No hearing date scheduled yet! If your representative or senator sits on the committee, please contact them in support of the bill. We are also happy to come out to speak to local organizations about our bill and how a public bank could benefit Massachusetts.

Transportation problems? Why not try a public bank?

Massachusetts suffered an embarrassing drop in the US News and World Report best state ranking last week, especially so because we blew it so badly in just one thing: transportation. We are a dismal 45th out of 50, and to make it worse, it’s a score not just determined by resident surveys, but also backed up by another recent poll.

The MassINC Polling Group, working for the Barr Foundation found that improving Massachusetts highways, roads, and bridges was the top priority for respondents, ahead of improving education or lowering taxes. Since 80% of respondents drive alone as their primary means of transportation, with about 20% commuting between 30 minutes and an hour each day, addressing transportation issues would have some substantial economic and social benefits.

The poll found voters want more funding for both public transportation and roads but didn’t broadly back any one mechanism for generating the revenue needed. A change in state law to permit cities and towns to put funding measures for transportation on the ballot had strong support. Support was also high for adding electronic tolling to more state highways, but only if tolls were used to reduce congestion in the regions where they were collected.

A public infrastructure bank, such as our bill would institute, doesn’t yet have a high enough profile to make it on to polls as a possible solution to state transportation funding problems. (North Dakota, the only state with its own bank, topped the US News rankings for quality of life, and came in second for both fiscal stability and infrastructure.)

We think a public infrastructure bank could make a big difference in increasing the availability of funds for roads, schools, public buildings, recreational and emergency service facilities, and even climate change mitigation methods, and these polls clearly indicate that our state can use all the help it can get. But the MassINC poll also shows that state residents support addressing problems regionally, meaning that we don’t just need to sell the idea of a state bank, we need to ensure that it operates transparently, takes local preferences for solving transportation problems into account, and works for all regions of Massachusetts.

Seattle issues a RFP for a public bank feasibility study

On Monday, Seattle made their effort to create a public bank official by issuing a request for proposals for a Seattle Public Bank feasibility study. The city is seeking “a skilled consultant available for immediate work to evaluate the legal, financial and administrative feasibility” of a public bank, as well as the potential community benefits. The consultant will be expected to deliver a final report by August 1, 2018. The city has budgeted $100,000 for the study. You can read the RFP here.

The RFP follows the Seattle City Council’s passage of Ordinance 125257 in February 2017, which cut back on the city’s dealings with Wells Fargo due to the bank’s involvement in the Dakota Access pipeline and predatory lending practices. Seattle opted not to renew their contract with Wells Fargo for bank depository services, and put a three-year ban on new investments in bank securities, while seeking a more socially-responsible banking service provider. At the time, some city council members also indicated interest in a city or state owned bank.

How a Massachusetts Infrastructure Bank could fund disaster relief and preparedness

A little over a month ago, a nor’easter flooded coastal neighborhoods in Boston and both the north and south shores. Today, the Boston area will likely set a new record high for February 21. Municipalities are only just beginning to plan for floods, droughts, severe storms, and record heat in the face of collapsing weather patterns; here’s how a public bank can help increase community resiliency.  This article was part of the presentation at a legislative briefing on H3543, An Act Establishing the Massachusetts Infrastructure Bank.

by Steve Snyder

As a chartered bank owned by the State and People of Massachusetts, the Massachusetts Infrastructure Bank is mandated to serve the needs of its citizens through its loan program. Disaster relief and public health emergencies are now occurring with increased frequency and they must be responded to quickly in order to save lives, preserve communities and businesses, and maintain our vital infrastructure. Institutions, strategies, IT infrastructure, and personnel plans are in place, but the bottleneck is in funding that is responsive, adequate, and sustained.

A state-owned bank can also respond rapidly and flexibly because its profits do not have to be maximized in the short-term to serve absentee shareholders. As a public institution, it can effectively coordinate with the local public safety, media, hospital, business, finance and insurance sectors as well as other State and Federal Agencies

The consequences of a rapid response are clear in the following example. During the Grand Forks flood in the spring of 1997, the state-owned bank of North Dakota quickly established nearly $70 million in credit lines for the state Division of Emergency Management, the state National Guard, the City of Grand Forks and its state university, and the rebuilding of a key dike. The Bank of North Dakota also worked with local financial institutions and foundations to raise and coordinate relief funds both for Grand Forks and other areas affected by spring floods. Further, BND negotiated forbearance on student loans and housing loans backed by the federal government. It also reduced interest costs for farmers.

The flood inundated 75% of homes, impacted five thousand businesses, and necessitated the evacuation of 50,000 people. Throughout the months of recovery the Bank of North Dakota tirelessly supported its citizens. As a result, Grand Forks lost 3% of its population between 1997 and 2000. By contrast East Grand Forks across the river in Minnesota lost 17% of its population during the same period. Having ready credit for saving lives and rebuilding meant that the community of Grand Forks and its tax base were largely preserved.

Massachusetts needs a state-owned infrastructure bank that can provide credit to rebuild our communities in the event of a disaster and support shared economic prosperity. For this reason, in addition to the improved safety and profitability of our State’s deposits, we urge you to support H3543.

 

The cannabis industry’s banking problem, plus Congressional fixes and who supports them

The disconnect between state-level legalization and federal prohibition has left the cannabis industry pretty much “unbanked,” and there are potentially billions of dollars in play, from small business loans to retail banking services to tax payments. In California, the question of what to do with this money is one of the drivers behind a growing interest in public banks, especially at the municipal level.

But federal prohibition also represents a little windfall for the US Treasury, as Ellen Brown points out in this post on the Web of Debt blog. Businesses that are legal at all levels of government are allowed to deduct costs when filing taxes. The bar owner who buys $2000 worth of little fake Tiffany table lamps can claim a business expense; the grower who buys $2000 worth of grow lights cannot. As a result, writes Ellen, “The government makes a massive profit off the deal, snatching up to 70 percent of the proceeds of the reporting businesses, as opposed to the more typical rate of 30 percent.”

Banks that take cannabis industry money can currently be accused of money laundering, which became a crime only in 1986, and probably shouldn’t be a crime in the first place, since, as Brown writes, it hasn’t been a deterrent, and its prevention leads to “reporting requirements [that] are so burdensome and expensive that they have caused many smaller banks to sell out to larger banks or close their doors.” A decriminalization bill in Congress, H.R. 1227, the Ending Federal Marijuana Prohibition Act, sponsored by Virginia Republican Thomas Garrett and 32 cosponsors, is one fix (so far the only Massachusetts cosponsor is Rep. Michael Capuano) Another is the Secure and Fair Enforcement (SAFE) Banking Act (HR 2215 in the House, with our Reps McGovern, Capuano and Moulton co-sponsoring, S1152 in the Senate with both our Senators signed on) to “provide a safe harbor” for banks that provide financial products or services to state-legal marijuana businesses.