public banking

Pima County Courthouse

Pima County Bond Issue: ‘Web of Debt’ or Investment for the Future? (video)

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Pima County CourthouseIn a month, Pima County voters will be asked to vote on a $816 million, seven-part bond issue that includes construction of multiple buildings and roads to benefit existing corporations or attract new businesses to Southern Arizona. Sprinkled amongst the corporate-giveaways are improvements or construction of libraries, community centers, parks, neighborhoods, and other perks that benefit the rest of us.

With 99 separate projects over a 27-year period, this bond issue is far-reaching in its scope and cost. The big question is: Is taking on this amount of debt sustainable and affordable?

If you have heard a public banking presentation by Arizonans for a New Economy, you know that co-directors Jim Hannley and myself strongly advise against borrowing from Wall Street. Wall Street banks have one goal: To make money for their shareholders; they couldn’t care less about local economic development or investing for the public good. Arizonans for a New Economy and the Public Banking Insitute support bringing taxpayer dollars back home from Wall Street and using that money on Main Street to self-finance infrastructure projects, education, low-cost loans for local small business, and much more through establishment of a public bank whose charter specifies “banking in the public interest” (not in the interest of Wall Street shareholders).

Risky Wall Street deals have entrapped many local governments in a web of debt and have caused disastrous consequences for cities like Detroit and Chicago. There is evidence that Wall Street actually targets economically depressed areas like ours…

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US Conference of Mayors to Consider Wall Street Bank Fees & Public Banking (video)

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Downtown Tucson
Downtown Tucson

Cross posted from Arizonans for a New Economy

At their upcoming meeting on June 19-22, the US Conference of Mayors will be considering hundreds of resolutions on everything from gun safety to tax incentives to jobs and education. Tucked into that long list of resolutions is the “Mayors Resolution on Strengthening Municipal Finances“.

This resolution addresses the millions of dollars in fees that Wall Street banks charge cities and challenges mayors to negotiate with bankers to reduce these fees or, alternatively, seek other more affordable means of financing– like establishment of a public bank.

Arizonans for a New Economy and the Public Banking Institute strongly support this resolution. Cities across the country– like Tucson– are strapped for cash and faced with tough budget choices. Paying outrageous bank service and financing fees only starves our local economy. If that cash were here in Tucson, we the people could use it to grow and improve our city– instead of wasting it on lining the pockets of the too-big-to-fail banks.

Bond Issues… booo

How do cities amass such high banking service fees? A major way that cities accrue debt (and related fees and interest) is through bond issues. For example, in recent years voters approved a city bond issue to fix the roads and a county bond issue to build a new animal shelter. On Election Day 2015, voters will be asked to approve yet another bond issue— this one covering everything but the kitchen sink. Listen up, people! Bond issues are not a panacea for all local funding needs. Yes, bond issues allow us to have the services, facilities, and infrastructure improvements we need but can’t fit into the budget– thanks to budget cuts by the Legislature– but bond issues carry a hefty long-term price tag.

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Arizona Senate

AZ Budget Solution: Grow the Economy, Don’t Starve It (video)

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Arizona Senate
Arizona Senate Chambers

Governor Doug Ducey and Republican leadership in the Legislature made headlines and sparked street protests this week when they tried to ram through a starvation budget that was negotiated in secret.

The wrong-headed budget starved universities with $104 million-dollar in cuts;  it stole even more money from K-12 education with a $98 million hit this year and another $157 million hit in the next year; just for fun, it cut an additional $8-15 from TUSD; it crippled job training with $30 million in cuts; it completely defunded community colleges in Pima, Pinal, and Maricopa Counties; it cut provider rates for people who provide medical care to Medicaid/AHCCCS patients by $127 million (which would result in the loss of $588 million of federal funds). And these are just the highlights.

This severe austerity budget will do nothing to grow the economy. It will starve the economy by taking more than a billion dollars out. This means more lay-offs, more bankruptcies, more business failures, more home foreclosures, more poverty, people on on public assistance, more homelessness, more crime, more incarceration, and more people and businesses leaving our state.

When Republicans talk about budgeting, they often give folksy example of a family sitting around the kitchen table to work out the budget and decide together how they are going to tighten their belts and make ends meet. Didn’t anyone at the kitchen table ever say, “Paw, I could get another job to bring in more money”?

Earlier this year, the media speculated how Ducey could possibly keep his campaign promise of balancing the budget without raising taxes and at the same time allow hundreds of millions of dollars in unaffordable planned corporate tax cuts (passed during the Brewer era) to go forward. (Besides all that, there is the court order that said the Legislature unlawfully cut Arizona school funding and should pay back $317 million in this budget and $1.6 billion in the future.)

Earlier this year, Ducey famously said, just because we don’t have enough money, doesn’t mean we need to raise revenue. Why not? Putting money into the economy grows it; taking money out, starves it. Arizona has options besides austerity. We can raise revenue and pay for the services we want: 1) legalize marijuana; 2) establish a public bank; 3) stop implementation of unaffordable tax cuts for out-of-state corporations; 4) invest in innovation.

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Arizona needs a public bank – support SB 1395

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I was reading the Denver Post over the weekend, and this op-ed caught my eye because Pamela Powers Hannley who blogs here, and her husband Jim Hannley, are active in the public banking movement in Arizona. Colorado needs a public bank:

After we bailed out the “too-big-to-fail” Wall Street banks in 2008 and 2009, things appeared to have improved. Today, Wall Street is rebounding and the job market is looking up. But the folks on Main Street working for low hourly wages or Coloradans paying tens of thousands of dollars in student debt with no end in sight, who lost their homes, or are working part time jobs with no benefits are not so sure.

Colorado entrepreneurs seeking green energy solutions and small business start-ups scramble for funding. Needed infrastructure projects like repairing our state bridges are not keeping up with civil engineers’ recommendations. Meanwhile, the marijuana industry has no place to bank its cash.

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public-banking-institute-mapThis year, North Dakota celebrates its 96th year of having a state-owned bank, the Bank of North Dakota, and is the only state that has one. Arguably, as a result of its bank, North Dakota was the only state not to suffer budget deficits or declining employment as a result of the 2008 crash. Its unemployment rate was and remains the lowest in the nation at 2.8 percent. And it has had larger budget surpluses each year since 2008, no bank failures, and has remitted $900 million in taxes to the people of North Dakota. Critics attribute North Dakota’s success to its increased oil revenues, but its big increase in oil income did not occur until 2010, and Alaska and Montana have had more oil but still had budget deficits and high unemployment. Today, North Dakota has one of the lowest rates of home foreclosures, and consistently has the lowest rate of credit card default and student loan default in the United States.

[Image: The Case for a State-Owned Bank (April 2012).]

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DuVal: Consider Public Banking to Heal Arizona’s Economy (video)

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In early 1900s, progressives from both political parties joined forces to create the Non-Partisan League. This led to creation of North Dakata's public bank. (Cartoon published in the Non-Partisan Leader in 1912.)
In early 1900s, progressives from both political parties joined forces to form the Nonpartisan League and create North Dakota’s public bank. One of the original goals was to save family farms from foreclosure by big banks. Thanks to North Dakota’s public bank and its local investment policy, it was the only state whose economy didn’t collapse during the 2008-09 Wall Street crash. (Cartoon published in the Non-Partisan Leader in 1912.)

Both gubernatorial candidates agree that Arizona’s economy is not performing well, but they don’t agree on what to do about it.

Republican candidate Doug Ducey likes to ask audiences how many of them are from somewhere else, and of course, some people always raise their hands. Ducey’s conclusion is that because of Arizona’s great weather, people will continue to move here– despite the shortage of good-paying jobs (and water). Tourism, transplants, and related services have made money for Arizona and will continue to do so, Ducey contends.

To please his corporate donors, Ducey’s economic plan is to push for more unaffordable corporate tax cuts and follow other red state governors– most notably Kansas’ Sam Brownback and NJ’s Chris Christie— to the poor house. He also wants to duck the court order requiring the state to fully fund education (instead of paying back the $1.6 billion that the Arizona Legislature illegally took from schools). Ducey is offering more of Governor Jan Brewer’s failed Tea Party economic policies: give tax cuts even though we’re broke, balance the budget on the backs of the school children and the middle class, hope people will continue to move here, and quietly pray for more water. This is what Ducey calls “kick starting the economy.”

As Democratic Party candidate Fred DuVal aptly points out, Ducey’s plan is based upon “tooth fairy economics” (AKA trickle down economics). Although DuVal is sometimes vague on specifics, at least he doesn’t rely on magical thinking to solve Arizona’s economic woes. In debates and speeches, DuVal talks about growing local small businesses to re-build Arizona’s economy, vows to repay what the Republican Legislature stole from the schools, ties a strong public education system to economic expansion, and suggests student loan relief for teachers.

How can DuVal do all of this? One bold non-partisan strategy is to establish a public bank to keep Arizona tax money at home and use it for local investment…

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