Why Public Banking

In today’s economy, Washington’s residents are struggling. Unless we prepare for our future, Washington will become an unaffordable state that is lacking in essential infrastructure. Fortunately, there is an answer. A public bank of Washington allows the state to make critical investments without raising taxes. Modeled after the Bank of North Dakota, a public bank of Washington would be financed by the revenue from the state. The public bank would then leverage its capital into credit for projects supported by voters and municipalities. Not only would this bring needed capital to neglected investments, but—because the bank operates on a nonprofit basis—it would also provide much needed competition to the private sector banking and act as a financial support system for communities throughout the state.


The Problem: Governmental Debt

Washington state is inching toward a debt crisis. According to a report from the Washington State Treasurer [2019 Debt Affordability Study], Washington has the sixth highest debt per capita of any state in the country. In the next four years, governmental debt is expected to climb from over $70 billion to over $90 billion. With a lack of a state income tax, Washington’s governments have limited ability to deal with this increasing debt without raising regressive sales and property taxes.










The Solution: A Public Bank

A public bank would give Washington’s local governments access to affordable capital. Instead of being driven by profit maximization, the public bank could set interest rates at a fair market price, provide access to capital outside of the bond market (with its cumbersome fees), and make it easy to invest in infrastructure projects without raising regressive taxes.


The Problem: Lack of Affordable Housing

Currently, Washington residents are facing a housing crisis. Nearly, 40% of the state’s renters are burdened by housing expenses; when compared to other US states and territories, Washington is ranked 15th for most expensive rent. Meanwhile, Washingtonians have the third highest average mortgage debt in the country, with an estimated 67.7% of homeowners making payments. The average mortgage debt in the state equals $307,407 -- more than $78,200 the national average.


Washington has critically under-invested in affordable housing. Since 1986, the Washington State Housing Trust Fund has invested nearly $1 billion to develop nearly 47,000 units, but this is far short of the needs of the state. A recent study found that Washington state is currently short over 140,000 housing units, making it the state with the fifth worst housing shortage in the nation.

Mortgage Debt By State

Rank State Average mortgage debt ($) Median household income ($)
1 California 396,229 80,440
2 Hawaii 387,977 83,102
3 Washington 307,407 78,687
4 Colorado 297,813 77,127
5 Massachusetts 292,513 85,843
6 New York 274,349 72,108
7 Maryland 274,311 86,738
8 New Jersey 270,329 85,751
9 Virginia 269,570 76,456
10 Oregon 261,147 67,058

Source: U.S. Census Bureau's 2019 American Community Survey


The Solution: A Public Bank

A public bank could offer capital at a much cheaper rate than the private market. This would make it easy to build low-income and public housing in the state because less of the financing would be dedicated to paying off debt. Additionally, liberally providing access to capital to build more housing will increase the supply of housing overall, thus bringing down the cost of housing for everyone.


The Problem: A Shortage of Clean Energy

In addition to housing, Washington state is lacking important clean energy infrastructure. Currently, approximately 20% of Washington’s energy is generated through fossil fuels. In 2019, the Washington State Legislature passed the Clean Energy Transformation Act (CETA), which required all utilities in the state to eliminate their coal use by 2025 and provide carbon neutral electricity by 2030. While CETA is helping to lurch the state toward a carbon-free future, the building up of clean energy sources has not kept pace with the speed of the phaseout. A study from the Northwest Power Pool raises the chances of a serve blackout in the state from <5% to 26% if Washington does not act quickly to replace its baseload fossil fuel power. Frequent power outages can be devastating for the state’s economy, especially low-income individuals, who will likely have to pay higher rates for less reliable power.









The Solution: A Public Bank

Washington needs to rapidly build out its clean energy infrastructure. Investors are often deterred from financing clean energy because high interest rates and slow return for multi-year projects makes clean energy a risky investment. In contrast, a public bank could offer clean energy projects much cheaper capital, with lower interest rates, which would mean they would more easily attract investments and be deployed much sooner.


The Problem: Declining Community Banks and Credit Unions

The banking sector in Washington has become dramatically less competitive. Unfortunately, community banks in Washington state are collapsing, with only thirty-six community banks left in the entire state. The lack of competition means that Washington residents have fewer options when needing to rely on financial institutions. Currently, Washington is one of the worst states when it comes to credit card debt.


Washington Debt
Type Ranking By State Balance Per Capita
Credit Card 12 $3,510
Auto Loans 31 $4,450
Student Loans 44 $4,270
Source: Federal Reserve Bank, March 2019


The Solution: A Public Bank

By partnering with a public bank, community banks and credit unions would be more secure. They would be more willing to grant loans to small businesses and clients that normally have trouble gaining access to credit. With the growth of community banks and credit unions, consumers in Washington would have more options. The competition in the market would drive down interest rates on homes, cars, and credit cards, and make the entire economy more equitable and fair.


The Problem: Struggling Cannabis Industry

Since 2012, Washington’s marijuana market has grown to annual sales of over $1.5 billion with more than 11,000 employees, and pays nearly approximately $700 million in fees and taxes. Despite this, federal law has prohibited Washington’s marijuana industry from accessing financial services. The overwhelming majority of financial services and assets held by the state’s marijuana industry is held by just six banks, three of them small credit unions. The lack of financial services has meant that most cannabis businesses must deal in cash. The cash-dependent nature of the industry has made it an easy target for criminals. In the first two months of 2022, there were more than fifty armed robberies of cannabis retail stores. In March of 2022, three people were killed in armed robberies of cannabis businesses in a matter of four days.

The Solution: A Public Bank

Washington's cannabis industry could thrive with a public bank. A public bank could provide affordable financial services to the cannabis industry, giving them access to digital transactions; this would allow them to be less reliant on cash, less a target for criminals, and would lessen the need for them to invest in their own security.


The Problem: Lack of Investment in Roads and Infrastructure

Washington was recently ranked 49th out of 50 states for drivers, partially because of its lack of investment in streets, roads, public transit, and walkable areas. According to the American Society of Civil Engineers, road construction in Washington is not expected to keep pace with population growth. At the current rate of investment, Washington’s roads are expected to dramatically worsen over the years.

The Solution: A Public Bank

With a public bank, Washington would be able to make critical investments in its roads and infrastructure. Funding major infrastructure projects would be more affordable, as the bank would have an incentive to complete projects and grow the state's economy, as opposed to maximizing the returns on each individual project. With more investments in roads and infrastructure, Washington can provide a greater number of union jobs with livable wages.


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