Mass. lawmakers could lead in boosting a bank for infrastructure

This letter from Chuck Grigsby, who is one of the Hub Public Banking group working for a Massachusetts infrastructure bank. 

April, 17, 2018

In “How should Boston fund its future?” (Opinion, April 10), with regard to infrastructure needs, Matthew Kiefer and Sam Tyler state, “Boston is mostly on its own.” They are correct, except Boston is hardly alone in facing this challenge. In a survey last year of 38 mayors and town managers across the entire state, 41 percent of respondents reported that they experienced difficulty raising financing for infrastructure, 54 percent reported that they had to defer critical projects, and 96 percent replied that they would be highly interested in an alternative to the private bond market.

A potent new addition to current financing sources is now under consideration in the Massachusetts Legislature. House bill 3543 would authorize the formation of a state-owned bank focused on providing lower-cost infrastructure financing across the state. It’s drafted to become self-sufficient after initial capitalization and especially to avoid competing with banks and credit unions in the state.

Similar bills for publicly owned banks have been filed in New Jersey, Michigan, and Alaska. Feasibility studies are underway in St. Louis; Philadelphia; Los Angeles; San Francisco; Berkeley, Calif.; and Seattle. Other cities reviewing their options are Chicago, Santa Fe, and Baltimore.

Over the last several decades, the Legislature has led the way nationally in creating more than 11 quasipublic funding sources structured to meet specific needs. It’s poised to lead again.

Charles T. Grigsby
Jamaica Plain

Same as it ever was…

There is not much to say about the content of this article detailing the unsurprising ways that Australian banks have been doing business—”lying to regulators, falsifying documents and taking bribes to extracting fees from customers long since dead.” Australian banks are apparently lightly regulated, and Australian bankers have taken advantage of that. No surprise anywhere on the globe at this.

What needs pointing out are the article’s two subheadings: “Bribery, lies, and charging the dead among misconduct admitted,” and “Inquiry may lead to slower earnings growth, higher costs.” Because obviously the most important thing, after the facts of the story, is not that people lost homes, retirees lost savings, and no one caught on for decades, but that the highly profitable Australian banking sector might have to follow some appropriate rules, making it less of a draw for investors for whom ethical business practices just get in the way of a payday.

It’s a given that profits are negatively impacted by getting caught doing something wrong; pointing it out as the key concept of a news story just normalizes it in a way that really should end.

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

Senate Chair: Senator James Eldridge  (617) 722-1120

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

Vice Chair: Senator Eric Lesser  (617) 722-1291

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

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.