Tag Archives: Mayor Javier Gonzales

Public Banking Task Force nominees confirmed

The Santa Fe City Council unanimously confirmed Mayor Javier Gonzales’ appointments to a new Public Banking Task Force on Wednesday.

The seven-member task force is charged with determining the necessary procedures, timelines and requirements to establish a chartered public bank.

Gonzales appointed J. Wayne Miller, vice president of commercial real estate at Washington Federal; Randolph Hibben, a retired banker; Darla Brewer, a senior forensic auditor with the state Securities Division; Kelly Huddleston, an attorney who founded the New Mexico Consumer Protection Law Center; David Buchholtz, an Albuquerque attorney who did legal work for a local organization advocating for a public bank; Judy Cormier, who has 30 years of consumer banking compliance experience; Elaine Sullivan, a public bank advocate; retired businessman Robert Mang; and city Finance Director Adam Johnson.

The mayor’s appointments, which council members confirmed without questions or discussion, sparked some concerns from the public about impartiality.

“From what I have read, this group, as presented, appears to be more of an advocacy group than one that can, in an unbiased way, evaluate this proposal,” Santa Fe resident Berl Brechner wrote in an email to the mayor and councilors Wednesday.

“Of particular concern,” the email said, “is that three of the proposed members have direct connections to ‘We are people here!’ which in its website contains a subgroup, ‘Banking on New Mexico,’ which has been a vocal advocate for the public bank concept for Santa Fe.”

Mayor makes picks for Public Banking Task Force

Eight months before the end of his four-year term, Mayor Javier Gonzales is recommending appointments to a task force responsible for research that could lead elected officials to dramatically change the way Santa Fe’s city government does its banking.

The task force will help determine requirements to establish a public bank. The nine-member panel must complete its work within six months of its first meeting, possibly making the idea of a public bank a major campaign issue in next spring’s mayoral election.

Public banking leverages a government’s assets to stimulate investment in the community. Examples of public banking include offering low-interest loans to local businesses or low-cost financing for public projects, such as housing and infrastructure.

Gonzales, who has yet to announce whether he will seek a second term, will ask the City Council on Wednesday to confirm his recommended appointees.

The mayor said the task force and his political future are unrelated.

“The public banking issue has nothing [to] do with politics,” he said in a statement, “it’s about making sure we’re putting Santa Fe’s money — the taxpayer’s money — to the best possible use and investing it back into the community for the things that keep our community moving forward.”

He added, “It’s a stretch to try to make this about an election, and it takes away from what we should be focused on — a debate about the merits of the public banking idea itself.”

While Gonzales is nominating appointees, as he does for other city committees and boards, he is not acting independently. In April, the governing body adopted a resolution to create a Public Banking Task Force that includes three members with financial or banking experience, two members with legal experience, one member with regulatory experience and two at-large resident members, plus the finance director.

Gonzales, who has championed the notion of studying whether a public bank would work in Santa Fe, said he heard about a local movement to create a public bank when he was on the campaign trail more than three years ago and decided then that he would explore the idea further if he won election.

“As I got more into the campaign and learned the stories and the challenges of Santa Fe and recognized that access to capital and new funding sources were limited,” he said in 2014, “the idea of a public bank became more and more important to me.”

Since then, the city has hosted a public banking symposium and commissioned a feasibility study that determined the city could benefit financially if it established a chartered public bank.

Now, the city is taking the next step by appointing a nine-member task force that will help the governing body determine the necessary timelines and procedures to start a public bank and to “make recommendations … in preparation for the governing body to make an informed opinion.”

Twenty-seven people applied to serve on the task force, from a former city attorney to a retired physicist.

“I’m very pleased that we received [27] letters of interest and résumés from a good mix of backgrounds, experiences and expertise,” City Councilor Renee Villarreal, lead sponsor of the resolution creating the task force, said shortly after the city’s deadline to submit applications to serve. “It’s exciting to have so much interest and commitment to serve.”

Here are Gonzales’ recommended appointments:

Adam Johnson is the city’s finance director. The resolution creating the task force called for the city finance director to serve on it. Johnson, who joined the city in February 2016, previously worked as Santa Fe County’s budget administrator.

J. Wayne Miller is an Española native who has been vice president of commercial real estate at Washington Federal since May 2005. Before that, he worked as a senior vice president at both Century Bank and First National Bank of Santa Fe.

“I love our community and would like to see the business environment grow to create new job opportunities for our youth, where they do not have to leave Santa Fe to find employment,” he wrote in his letter of interest.

Randolph Hibben has founded a number of community banks in suburban Chicago. Hibben retired in 2008 as chairman and CEO of Lake Forest Bank & Trust Co. in Illinois.

“My partners and I founded the bank in 1991 to provide a low-cost community-banking alternative to the major national players that predominated at the time,” he wrote in his application.

Hibben, who serves as vice president of the Santa Fe Habitat for Humanity board, wrote that he was introduced to the idea of a public bank through the “We are people here!” initiative. He said Craig Barnes, who led the effort until his death last year, finally convinced him the concept could be viable.

“I have a number of questions and concerns but there appears to be a niche for public banks in our nation’s financial system,” he wrote. “I see no reason why the city of Santa Fe shouldn’t fully explore becoming one of the first municipalities to establish a grassroots bank of the people.”

Darla Brewer is a financial analyst with more than 15 years of experience. She is a senior forensic auditor with the state Securities Division, working with a team of attorneys, financial auditors and others to investigate fraud, embezzlement and violations of securities law.

Brewer, who has worked for the State Investment Council and state superintendent of insurance, also is the creator and interviewer of a radio show called New Era Economy.

“My vision is to combine my passion for finance with my passion for communication to help form a deeper understanding of how profit can coexist with human, social and environmental impacts,” she wrote in her application letter.

Kelly Huddleston, an attorney, is the founder and owner of the New Mexico Consumer Protection Law Center and Huddleston Law LLC. She said she is interested in exploring the public bank option after having worked as a consumer protection lawyer dealing directly with bank issues and abuses for the past seven years.

“My primary interest in joining this task force would be to research the national and state legal framework necessary for creating a public bank and to clearly lay out the regulatory steps in a straightforward manner for [the governing body] and the public to consider,” she wrote.

Huddleston said she is also interested in sharing what she learns in Santa Fe.

“On a more personal note, I am a member of a tribe in Oregon, and they are interested in creating a bank of their own,” she wrote. “It is my hope that I can take what I learn in this process to help out my tribe as well.”

David Buchholtz is a partner in an Albuquerque-based law firm with an office in Santa Fe. He has served as lead bond counsel to the city of Albuquerque, the New Mexico Finance Authority and The University of New Mexico.

“I did some legal work for the ‘We are people here!’ foundation [and] Mr. [Craig] Barnes before he passed away,” Buchholtz said in an interview, referring to a group that has pushed for the city to establish a public bank.

“I’ve been talking to those folks. I have an expertise in government finance and such, so they asked me whether I would be interested to do this, and I said, ‘You know, so long as I’m not taking the place of a person who lives in Santa Fe.’ I have an office up there, but I haven’t lived there for a long time.”

Buchholtz, who counsels private businesses and governments in a variety of matters pertaining to growth, corporate governance affairs and government relations, also has served as state chairman of the New Mexico Anti-Defamation League.

Judy Cormier, who moved to Santa Fe from the East Coast with her husband four years ago, has 30 years of consumer banking compliance experience.

“I have built successful compliance programs within two separate institutions and was chief compliance officer/director of consumer compliance for 11 years,” she wrote in her application.

Elaine Sullivan is a founding member of “We are people here!” and now serves as president of the organization and its initiative, Banking on New Mexico, which advocates for a public bank “to democratize our local economy and support the city in its stewardship of the peoples’ money.”

Sullivan has two master’s degrees, one in education and the other in applied behavioral science.

“I am delighted that a task force will now address the questions yet to be answered about whether a chartered public bank is a fit for our city,” she wrote. “I would like to help ensure that qualified due diligence is applied to this research, in whatever ways I can be helpful.”

Robert Mang co-founded and retired from the Regenesis Group, a Santa Fe-based international consulting company to developers, architects, civil engineers and planners.

“I am particularly interested in the potential a public bank has to offer our citizens, both in savings to the city as well as the greater beneficial impact that would come from investing its funds locally,” Mang wrote in his application letter.

What if People Owned the Banks, Instead of Wall Street?

When Craig Brandt marched into the City Council chambers in Oakland, California, in the summer of 2015, he was furious about fraud.

The long-time local attorney and father of two had been following the fallout from the Libor scandal, a brazen financial scam that saw some of the biggest banks on Wall Street illegally manipulate international interest rates in order to boost their profits. By some estimates, the scheme cost cities and states around the country well over $6 billion. In June of 2015, Citigroup, JPMorgan Chase, and Barclays, among other Libor-rigging giants, pleaded guilty to felony charges related to the conspiracy and agreed to pay more than $2.5 billion in criminal fines to US regulators. But, for Brandt, that wasn’t enough. He wanted the banks banished, blocked from doing business in his city.

“I was totally pissed about it,” he says. “It was straight-up fraud.”

So, in a small act of stick-it-to-the-man defiance, Brandt drafted a resolution that barred the municipality from working with any firm that had either committed a felony or had recently paid more than $150 million in fines. He presented the homespun and eminently reasonable legislation to city officials and urged them to adopt it.

“The city councilors said they couldn’t do it,” Brandt says. “If they did, they wouldn’t have a bank left to work with. They said there wouldn’t be any bank big enough to take the city’s deposits.” Oakland, it seemed, was hopelessly dependent on ethically dubious and occasionally criminal financial titans. Brandt, however, was undeterred.

After the City Council turned him down, he started looking for other ways to wean Oakland off Wall Street. That’s when he fell in with a group of locals who have been nursing an audacious idea. They want their city to take radical action to combat plutocracy, inequality, and financial dislocation. They want their city to do something that hasn’t been done in this country in nearly a century, not since the trust-busting days of the Progressive Era. They want their city to create a bank—and, strange as the idea may seem, it’s not some utopian scheme. It’s a cause that’s catching on.

Across the country, community activists, mayors, city council members, and more are waking up to the power and the promise of public banks. Such banks are established and controlled by cities or states, rather than private interests. They collect deposits from government entities—from school districts, from city tax receipts, from state infrastructure funds—and use that money to issue loans and support public priorities. They are led by independent professionals but accountable to elected officials. Public banks are a way, supporters say, to build local wealth and resist the market’s predatory predilections. They are a way to end municipal reliance on Wall Street institutions, with their high fees, their scandal-ridden track records, and their vile investments in private prisons and pipelines. They are a way, at long last, to manage money in the public interest.

Since 2011, advocates from a national nonprofit called the Public Banking Institute have traveled across the country, preaching the practical benefits of public banking and recruiting or training activists and organizers to take up the cause. They have found willing and enthusiastic supporters from coast to coast. The movement has been embraced in Philadelphia, where the city council held hearings on the idea last year. It’s been championed in Seattle and San Francisco, where a number of city supervisors are calling for a task force to study public banking. It’s taken root in Santa Fe, with backing from the mayor, and in Oregon, Vermont, and even New Jersey, where a leading Democratic gubernatorial candidate, Phil Murphy, has proclaimed his desire to create a state bank right next door to the financial capital of the world.

“I believe this is the wave of the future,” says Craig Brandt, who is now a leader of Friends of the Public Bank of Oakland, the group advocating for public banking in the city. “And I hope Oakland will be the first one out the door to do it.”

The city is well on its way. Last November, the Oakland City Council passed a resolution announcing their intention to explore the creation of a public bank. In February, elected officials and community activists gathered at City Hall for a packed forum on the benefits of a public bank, including the possibility that it could hold deposits from the state’s multibillion-dollar cannabis industry and help promote affordable-housing development. This summer, meanwhile, the council will likely vote on whether to dedicate as much as $100,000 to fund a feasibility study that will explore the technical requirements of creating an independent publicly owned financial institution in Oakland.

“The fundamental point is to have a bank whose purpose is to be responsive to community needs,” says Oakland Councilmember Rebecca Kaplan, a key backer of the local public-banking movement. “This would allow us to save money compared to traditional corporate bank rates, and it would allow us to fund vital projects based on community need rather than having those decisions driven by the profit motive.” She says the City is also interested in the possibility of creating a regional public bank by partnering with neighboring cities like Berkeley and Richmond, California.

“The more folks on board,” she said, “the stronger the support for taking this kind of action.”

Public banks have a long, though subterranean, history in the United States that stretches back to the days of Benjamin Franklin, who helped establish a public land bank in Pennsylvania to provide cheap loans to small farmers. Even today many public institutions, from the Federal Deposit Insurance Corporation to the Small Business Administration to the Federal Housing administration, are essential components of America’s banking system. But there’s only one true public bank in this country and it’s not in Washington or New York or some coastal liberal enclave. It’s in North Dakota, where it has survived and thrived for nearly a century.

First established in 1919 by populist state legislators eager to extend credit to cash-strapped farmers and ranchers, the state-owned Bank of North Dakota (BND) is now a modern and multifaceted financial juggernaut. The bank holds deposits from government agencies. It provides low-cost credit for school construction and municipal infrastructure projects. It refinances student debt at reduced interest rates. Rather than opening branches of its own, it generously partners with local community banks and credit unions tos issue small-business, home, and agricultural loans. Best of all, it funnels its profits back into state coffers whenever North Dakota has budget troubles. The bank is, in other words, essentially socialist.

It’s also a steady source of profit. Last year, according to its annual report, the Bank of North Dakota saw its 13th consecutive year of record profits, taking in more than $136 million in income while growing its loan portfolio by $449 million dollars. And, unlike some of its counterparts, the bank accomplished all that without opening fraudulent accounts or manipulating interest rates or otherwise scamming consumers.

The bank’s success—its long track-record of supporting and stabilizing local economies, sharing the wealth, and minting a profit to boot—has turned it into an intriguing model for cities around the country that are keen to find creative fixes for their ongoing financial woes.

“Public banking is finding its time now because municipal executives have very poor choices,” says Walt McRee, the chair of the Public Banking Institute. “As things deteriorate and have to be fixed, as population grows but jobs decline, as tax receipts dry up, cities can either can cut services, raise taxes, fire people, or privatize things. But those trends are enormously destructive.”

“The prospect of a public bank does something entirely different,” he continues. “It gives a community the ability to liquefy its own assets and lend itself money, to do things it needs to do with money it already has, to hold on to people’s capital instead of sending it to Wall Street.”

Consider municipal bonds. Cities regularly go to the municipal-bond market to raise money for big projects, from school construction to bridge building to park development and more. These bonds, however, come with overhead costs in the form of fees that normally hover around 1 percent, but can climb as high as 10 percent, of the bond’s principal value. A recent report by the University of California Berkeley’s Haas Institute estimates that cities and other public entities pay upward of $4 billion a year in such fees, an enormous sum that serves only to fatten the purses of multinational banks, legal firms, and others involved in the bond-issuance business. A public bank could help reduce these costs and free up funds by enabling a city to deposit its money in a public entity instead of a profit-centric institution like Wells Fargo or JPMorgan Chase. The city would then be able to borrow money from its own bank rather than turning to the Wall Street bond market, with its overhead costs and market-set interest rates. It could, in short, introduce a radical alternative into the realm of municipal finance.

One of the other places where this radical alternative has taken root, surpassing even Bay Area efforts, is Santa Fe, New Mexico. The movement in that city of 67,000 started gathering momentum in 2014, when a small but determined group called Banking on New Mexico held a symposium to promote the idea. More then three hundred people showed up, including the newly elected progressive mayor, Javier Gonzales.

“A group of advocates met with me early in my term,” says Gonzales. “I was really intrigued and excited about an opportunity to explore a different way to have fiscal relationships.”

In early 2015, Santa Fe commissioned a private consultant, in partnership with New Mexico State University, to conduct a feasibility study into public banking. A year later, in January 2016, the report came back and the news was positive: By funding the city’s capital needs and improving municipal cash management, among other functions, a public bank could generate more than $24 million in savings and earnings for Santa Fe over a seven-year period. And such a bank would be particularly effective, says Katie Updike, the consultant who authored the study, if it serviced the city as well as the surrounding county and school district.

“In the case of Santa Fe, where I saw the biggest benefit is if the city, county, and school district worked together,” she says. “When you begin to step out of the jurisdiction of the city and look at the county and the school district too, which are separate entities, all their cash could be pooled and used to fund projects and then it began to get more interesting.”

In late April of this year, based on the results of the feasibility study, Santa Fe’s city council announced that it was creating a nine-person task force to spend six months digging deeper into the legal and financial prerequisites of establishing a public bank. The task force will focus, above all, on developing a governance structure for the bank.

“Governance is a concern for a lot of people,” says Elaine Sullivan, a leader of Banking on New Mexico and a passionate promoter of the cause. “People don’t want the bank run by political officials, and it wouldn’t be. There would be a clear distinction between the public bank, which would be managed by public bankers, and the city of Santa Fe.”

Indeed, the prospect of political interference into a public bank is one of the most common critiques of the idea. If public banks are to succeed in cities around the country, say skeptics and supporters alike, they must to be firmly insulated from the whims of legislative bodies and elected officials.

Here, once again, the Bank of North Dakota offers a model. While overseen by a commission of elected officials, including the state’s governor and attorney general, BND is managed on a day-to-day basis by an independent and highly transparent executive committee of professional financial managers. Its operations are also subject to regular inspection by independent auditors. BND, moreover, maintains public goodwill by declining to compete with local banks. It has no retail locations or ATMs. Rather, it partners with community banks and credit unions to provide its services.

By putting similar structure in place and starting small, Sullivan believes a public bank in Santa Fe could someday be a smash hit. It wouldn’t just provide ample economic benefits to the city but would serve a larger purpose too.

“As the global banks and major corporations that don’t have a moral tether have become more and more powerful, communities have become weaker and weaker and more passive,” she says. “A public bank is about addressing plutocracy. It is about restoring hope.” A public bank, she asserts, would be a red-hot engine of local economic democracy.

This essential fact, more than anything else, explains why the public-banking movement is blossoming in a post-recession, too-big-to-fail America where Donald Trump rules the White House and Wall Street rules Washington.

“We are seeing a resurgence of community-oriented life and activism and vision in this imperial era,” says Councilmember Kaplan of Oakland. “And it has strengthened the movement.”

Public Banking for Santa Fe: An Interfaith Forum

Photo:HANNAH COLTON

Elaine Sullivan of Banking on New Mexico speaks to a sanctuary full of Santa Feans at an interfaith forum on public banking, March 30, 2017.

By HANNAH COLTON • KSFR.org | APR 4, 2017

We’re looking at the latest push for a public bank for the City of Santa Fe … Last Wednesday City Councilor Renee Villarreal re-introduced a proposal to create a task force to determine what it would look like to launch a public bank. The following evening the advocacy group Banking on New Mexico hosted an interfaith dialogue about public banking and economic justice.

Cash Withdrawal

Come the fall, the city government could sever ties with a bank that’s helping to fund the Dakota Access Pipeline.

Santa Fe in 2013 approved a four-year contract with Wells Fargo, agreeing to pay the bank about $449,000 over the period for fiscal agent services. But the city is free to sever ties with Wells Fargo in October, due to a clause in the agreement that allows either party to terminate the contract 60 days before the end of 2017.

In an interview with SFR, Mayor Javier Gonzales threw his support behind such a change.

“When the city has money involved with banks that invest in projects harmful to our community and counter to the will of our city, we need to look at viable alternatives,” Gonzales said in an phone call from Washington DC, where he’s meeting with the US Conference of Mayors. He also reiterated his support for a study on the feasibility of establishing a public bank to manage Santa Fe’s finances.

A coalition of local activists last week asked the City Council to divest from Wells Fargo over the bank’s investments in the pipeline, following a national movement to boycott financial institutions that fund the construction project. Gonzales previously demonstrated outside Wells Fargo as part of a national day of action on Nov. 15.

The council’s second-highest-ranking member also hinted at support in an email to SFR. “I think we would all feel more comfortable using a local institution,” said Mayor Pro Tem Signe Lindell.

The city maintains 15 Wells Fargo accounts, adding up to holdings of about $46.8 million, which covers payroll, general liability insurance claims, workers’ comp claims, savings, utilities and other functions.

Wells Fargo is among the 35 institutions bankrolling the Dakota Access Pipeline or the companies overseeing its construction. The bank has pitched in about $500,000, according to a study by Food and Water Watch, a progressive research group.

About two dozen Santa Feans spoke in support of the effort during last week’s council meeting on Jan. 11, commandeering the chambers during the evening’s public comment session. Earlier in the day, the activists demonstrated outside the downtown Wells Fargo branch on Washington Avenue.

Since last spring, thousands of activists have swarmed a campsite north of the Standing Rock Indian Reservation in North Dakota to protest the construction of an oil pipeline near the tribe’s land. Tribal members worry a rupture in the Dakota Access Pipeline could contaminate their water supply, as the proposed route runs beneath the Missouri River.

Over the summer, the protest camp near Standing Rock became something of a mecca for environmentalists and supporters of Indigenous rights. Social media users circulated footage of police crackdowns on the site, including one episode in which law enforcement sprayed cold water on the protestors in freezing temperatures.

The City Council late last year passed a symbolic resolution supporting the Standing Rock Sioux Tribe and condemning excessive force on protesters. It also called on “local financial institutions to divest from the Dakota Access Pipeline Project and invest instead in life-supporting projects and renewable energy projects.”

But Santa Fe should offer more than gestures to the self-described “water protectors” camping out at Standing Rock, said Jeff Haas, a civil rights lawyer who is representing a number of anti-pipeline activists. “I’m not asking for a symbolic statement of support,” Haas told councilors. “We can make a difference.” “The record on spills is consistent,” said activist Margaret Kuhlen. “Pipelines break.”

The actions last week were sponsored by Earth Care, the environmentalist organization, and Retake Our Democracy, a progressive organizing group that grew out of the local campaign supporting Bernie Sanders for president. Jeff Ethan Au Green, a former City Council candidate who now lives in Colorado, rode a bus here last week to help direct the campaign.

Paul Gibson, co-founder of Retake our Democracy, says his volunteer corps of about 50 people will research viable alternatives to Wells Fargo for the city’s fiscal agent. That effort likely got a boost from city council on Dec. 14, when the governing body lowered the collateralization requirement for Santa Fe’s fiscal agent from 102 percent to 50 cents per dollar.

Another proposed change would require the city to consider as criteria social responsibility before selecting a fiscal agent, inspired by a resolution currently being considered by Seattle’s City Council. Alongside Wells Fargo’s pipeline investment, the bank recently came under fire for a high-profile scandal wherein the bank’s employees created thousands of fake accounts to meet sales quotas.

The campaign against Wells Fargo represents the first high-profile cause championed by Retake Our Democracy since the November elections. Gibson said City Council should be prepared for more. “This is all part of a larger plan that recognizes that right now, given the changes in Washington, the best avenue for progressive change and policy change is at the local level,” he said.

CORRECTION: A previous version of this article misstated the mode of transportation used by Jeff Ethan Au Green to travel from Boulder to Santa Fe. He rode a bus, not a personal vehicle.

Public Banks Can Help Cities Honor Their Commitment to Give Sanctuary to Immigrants

Photo: The First Bank of the United States in Philadelphia. (Teemu008 / CC BY-SA 2.0)

 

Mayor Javier Gonzales of Santa Fe, N.M., was defiant when he spoke with National Public Radio’s Kelly McEversin November. Donald Trump had just won the election after running on a strong anti-immigrant platform, emphasizing his intent to cut federal funding to “sanctuary cities,” municipalities that have pledged to neither detain nor prosecute people solely for being undocumented immigrants. Gonzales said that would not, while mayor, use municipal funds or resources to enforce federal immigration laws, nor would he allow police or city employees to inquire about a person’s immigration status.

In the interview, Gonzales pointed out that Santa Fe had welcomed immigrants for over 400 years, longer than the age of the republic. He said the city would honor U.S. Immigration and Customs Enforcement requests to refer undocumented individuals arrested for violent crimes to ICE. But he saw the incoming administration’s funding threats as “a test of our values,” saying, “every leader across the country will have to make a decision about what are we going to stand for?”

In Santa Fe’s case, the proposed cuts would amount to 2 percent of the city’s budget—about $6 million—and Gonzales acknowledged that the loss would be difficult to absorb. “We’ll work to find the funds if it gets to that point,” he said, “to make sure that people aren’t left behind.”

If McEvers had asked what possible sources of funding might replace the money Trump is threatening to take away, Gonzales might have answered that Santa Fe was in the advanced stages of considering the creation of a publicly owned bank. In late October, three City Council members introduced a resolution to take the “final steps to determine” whether a public bank would be feasible. Earlier in 2016, a local advocacy group named Banking on New Mexicoreleased a five-year model projecting that a Santa Fe bank could reduce debt service costs by $1 million a year and earn an annual profit, netting the city over $10 million in the bank’s first five years. While that wouldn’t completely offset funds the new administration is threatening to withhold, it would put the city in better shape to absorb the loss and begin the process of building an autonomous local economy that over time could transcend much of the need for federal dollars. 

The many municipalities that have stated their intention to remain sanctuary cities despite the incoming administration’s threats have done so because sanctuary status reflects their moral values, their policy concerns (including the preferences of their law enforcement officials), and the desires of their residents. If the new administration makes good on its threat to strip federal funding from cities that refuse to comply with ICE detainer requests, it could mean those cities will pay a price for exercising their values, from the $6 million at stake in Santa Fe to hundreds of millions of dollars in Los Angeles, Oakland, or San Francisco. In fact, President-elect Trump’s threats put these cities between a rock and a hard place since, as Rolling Stone’s Tessa Stuart recently pointed out, giving up their sanctuary status could prove to be even more costly to cities than reasserting it, with irreparable damage done to local businesses and communities.

But like Santa Fe, many sanctuary cities have strong movements for public banks, although not all have taken the steps Santa Fe’s city council has. Oakland’s city council adopted a resolutionto study public banking several weeks ago (and reaffirmed their status as a sanctuary city at the same meeting). Philadelphia’s did the same earlier this year. 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. If implemented in those cities and states, public banks could provide a financial foundation for municipalities charting their own courses in the face of an aggressive national executive.

What Public Banks Do, and Why Cities Need Them

Run as a public utility and subject to public oversight, a public bank takes deposits of government money, money which is now typically deposited with Wall Street banks. In turn, the bank’s credit can be used to finance public works and local business and pay a dividend into the public treasury. The Bank of North Dakota (BND), currently America’s only public bank, helps finance that state’s infrastructure, education, and public services, supporting community banks when those banks lend to local businesses. BND provides low-interest loans to towns, farmers, small business startups, and students. For several years, the Bank paid the state an annual $30 million dividend, and stopped doing so only when the state budget was so healthy that the BND was better off retaining the earnings to expand its capital base. Public banks in other countries do the same thing, steering financial support to public goods at low or no interest, providing liquidity and financial security through economic downturns and keeping local economies diverse and vibrant.

Public banks can do all of this by giving municipalities (and states—if they model themselves after the Bank of North Dakota) the power to create money through fractional reserve banking, as private financial institutions currently do. This creates multiple benefits: the public’s credit can be used to build a loan portfolio that funds projects that reflect the values of the taxpaying public; the tax base can be expanded by using this loan portfolio to direct and grow the local economy; and a new, non-tax source of public revenue is established. (The BND generated $169 per every North Dakotan in 2015.) Most importantly, these benefits allow a municipality to achieve a greater measure of economic independence, rendering threats of a withdrawal of funds from the federal government less relevant.

The financial threats made by the incoming administration to punish sanctuary cities rely on a myth of fiscal scarcity, the idea that there’s only so much money to go around, and that only big private banks and tax-hostile politicians can define those limits. Cities are reliant on the federal government because they are chained to Wall Street banks, whose propagandists perpetuate the myth of scarcity, while their managers mismanage public funds.

Municipal finance is vulnerable because government at all levels has facilitated the colonization of cities, counties, and often states, by Wall Street. The chief means of colonization has been through the manipulation of financial markets and the trapping of governmental financial management in those markets. Reluctant to raise taxes, cut budgets, or sell public assets, these municipalities are mandated to use private financial institutions to make public financial decisions. Hostage to the bad deals that make brokers and managers wealthy even when they fail their client investors, cities pushed to financial insolvency rely on federal aid, and are thus vulnerable to pressure from an administration filled with the same financial interests as the banks themselves.

Cities, counties, and states can build a firewall against the incoming administration’s threats, and create long-term fiscal stability in the chaotic years ahead, by opening public banks. By lending at low interest and paying that interest directly back to treasuries, public banks provide governments with both a source of financing and a regular source of revenue. A city-owned public bank could turn a profit for the city in its first year by using the bank to fund its infrastructure with public credit. Not only would the city avoid the costs of the municipal bond market and the risks of Wall Street losing its savings in a bad debt swap or other chicanery, but investment could target the services, economic sectors, or infrastructure upgrades the city needs most.

Even if public banks didn’t offset losses of federal funding dollar-for-dollar, they would help sanctuary cities build additional value-generating and budget-saving projects resulting in long-term immunity from federal fiscal blackmail. The Bank of North Dakota helps municipalities in North Dakota avoid the bond market by providing infrastructure loans of up to $15 million at 2% annum for up to 30 years. Public banks ensure small business liquidity, infrastructure financing, the provision of public services, and healthy, in-the-black municipal treasuries, and they do so democratically, without feeding the destructive forces of finance capital. Public banks have the power to finance municipal economies which, when scaled correctly, can meet people’s needs with or without federal support.

New Economies, Sanctuary Cities, and Economic Justice

Additionally, public banks can serve as engines of new economic practices, some of which many sanctuary cities are already beginning to support. As Alexander Kolokotronis of the Student Organization for Democratic Alternatives writes, many of the biggest cities defying the president-elect’s ICE demands, from city governments in the San Francisco Bay Area to New York and Boston, “are increasingly funneling resources into worker-cooperative development, and devolving fiscal capacity to the community through participatory budgeting—both of which have also empowered undocumented immigrants in the policy realm as well as in their day-to-day economic well-being.”

Cooperative economics and participatory budgeting go hand in hand with public banks, which is why political candidates from Bernie Sandersto recent Baltimore Mayoral candidate Joshua Harris support public banking as part of an overall policy system that includes worker-run enterprises, green energy, public transit, and neighborhood economic empowerment, all financed by democratized banks independent of Wall Street, aloof shareholders and risky financial gambles.

Welcoming immigrants and providing them with safe space is also part of a vision articulated by organizations like Right to the City, in which democratically-run, socially and economically just communities emphasize environmental sustainability, immigrant rights and the view that land is a public commons. Municipalities’ ability to overcome material insecurity is a bulwark for defending such values. Because public banking treats finance as a public utility rather than a source of private profit, it is a values-compatible approach to funding cities’ longstanding commitments to both sanctuary and economic justice.

Matt Stannard is Policy Director at Commonomics USA and has served on the board of directors of the Public Banking Institute. Marc Armstrong co-founded the Public Banking Institute and was its first Executive Director and is President of Commonomics USA.

What’s all the fuss about a public bank in Santa Fe?

The Bank of North Dakota’s headquarters sits in west Bismarck, N.D. Standard & Poor’s recently gave the bank an improved credit rating, which its president says will allow it to better able assist private banks with loans and government agencies with financing public works projects. (AP Photo/Dale Wetzel)
The Bank of North Dakota’s headquarters sits in west Bismarck, N.D. Standard & Poor’s recently gave the bank an improved credit rating, which its president says will allow it to better able assist private banks with loans and government agencies with financing public works projects. (AP Photo/Dale Wetzel)

It was the windswept dust bowl in one of the most rural states in the country that forged America’s one and only public bank.

The North Dakota public bank was launched in 1919 after farmers and ranchers, burdened with credit and harsh weather, saw land repossessed by private banks, many from out of state. “At the time, farmers were utterly dependent on out-of-state grain milling companies, national railroads, and Minneapolis banks, all of which had been gouging farmers,” according to a history of the bank published by the Institute for Local Self Reliance, a national nonprofit that advocates for local communities to solve their own problems rather than turning to national providers.

The bank today has $4 billion in loans, and North Dakota has one of the lowest foreclosure rates in the country. Its public bank is among the healthiest compared with private banks nationwide in terms of profit largely because of lower operating costs, according to The Wall Street Journal. “It looks like socialism,” Ellen Brown, founder of the Public Banking Institute, said in a recent lecture, “but North Dakota is a very conservative state. It also looks like state sovereignty.”

Propelled not by the scarcity of capital but excess, the city of Santa Fe today finds itself at the fore of a new public banking movement. As money has moved across state lines and government bonds remain in demand by retirees and mutual funds, easy borrowing is costing taxpayers millions of dollars in the form of additional fees.

And with that money comes distrust and the desire to keep profits local. Santa Fe City Councilor Renee Villarreal, sponsor of a public bank resolution before the Santa Fe City Council, said the issue has surfaced since the financial meltdown put big banking under the microscope, offering an unflattering view.

“It’s our money. It should benefit us,” said Nichoe Lichen, part of the group Banking on New Mexico, which is leading the effort in Santa Fe to create a public bank.

Though the city of Santa Fe is the only local or state government that has so far completed a feasibility analysis for a public bank, others, including Philadelphia and Oakland, are moving forward with discussions, as well as the states of New Hampshire, Massachusetts, Vermont, California, Washington and Alaska.

Walt McRee, chairman of the Public Banking Institute, said efforts are drawing support from fiscal conservatives. “Several of the state bills are being driven by tea party Republicans,” he said.

Villarreal’s measure does not create a public bank in city government. It establishes a task force that would take public input, conduct research and present options to the City Council on what a bank’s policies and governance would look like. She introduced the measure last month, but pulled it back for more study.

She is ready to move forward again in January.

Still, even that small step brought pushback from those who either don’t trust the city or see a public bank as another bureaucracy.

James Lodes, a retired senior bank loan officer in Ohio, recently wrote a letter to the The New Mexican saying the city can do a lot of other things to better manage cash without establishing a bank and spending $1 million a year for operations.

“If you’re fortunate to have $200 million in public dollars to invest, figure out the best thing to do with it, don’t automatically choose choice A, a public bank,” he said.

He added the first chore is to segregate funds and find out what money is obligated. Some dollars might be federal grant money, other dollars might be paid by water users. Once the city knows what money is available long term, it might be able to “just write a check” to finance some of its borrowing.

Christopher Erickson, an economics professor at New Mexico State University who helped with the feasibility analysis for a public bank in Santa Fe, said even with the success in North Dakota, there might be a systemic reason there is still just one public bank in the United States.

“It’s not consistent with the tradition of the United States to have the government compete with the private sector,” he said.

Lichen argues that doesn’t mean taxpayers are obligated to enrich the shareholders of private banks. She also acknowledged there needs to be more public outreach and education in the community about the idea, and that will begin in January.

The North Dakota model is far different from what is envisioned in Santa Fe.

For one, the state of North Dakota requires all public money to be deposited in its bank. That enables the bank to finance public projects as well as write loans to business owners, and underwrite student loans and home mortgages.

It also partners with private banks on larger development projects as a way to share risk.

Any public bank in Santa Fe would initially fund just the borrowing of the city, and then perhaps the county and school district. It would not accept individual deposits, and would not compete with private banks for other types of small business loans, according to those backing the effort.

“A public bank would have just one depositor,” Lichen said. “It’s really a simple idea, but people are not used to thinking about public funds, community funds being used for the public.”

Eventually, the bank might obtain a charter and expand with some lending for targeted economic development projects, but that effort would be years away.

To highlight the savings to taxpayers, it must first be noted that any public project such as a school or road or water system that relies on bond money costs 30 percent to 50 percent more because of financing fees and interest payments. Homeowners who pay a mortgage understand this concept, as do new-car buyers — higher interest rates increase the cost of these items, even if their sticker price stays the same.

A better example of what a public bank might look like here is the New Mexico State Board of Finance, which has an independent board that makes decisions on loan requests from local governments for capital public projects, such as water and sewer work and public buildings.

The board meets monthly in open session and keeps its own minutes, and members are appointed by both parties of the Legislature, the state treasurer and the governor.

But even the Board of Finance borrows money from private markets and pays the prevailing interest rate. A public bank in Santa Fe would use existing taxpayer money for its loans back to the city, and set interest rates, but it would be more akin to borrowing from one’s self.

The deposits would come from a portion of the $222 million in balances now in various city bank accounts. That amount is unspent revenue from taxes and fees, and money set aside by the city for future projects or obligations, according to financial reports.

Of that money, at the end of 2015, $87 million was at Wells Fargo Bank, with the remainder at First National Santa Fe or community banks and credit unions.

Lichen points out that all those tax dollars are being loaned out by those banks for a profit, “probably not in New Mexico.”

Advocates are suggesting a public bank in the city start with just $10 million of the city’s existing money.

But details on specific restrictions and limitations on a public bank would have to be resolved by the Santa Fe City Council. An estimate by Public Banking New Mexico shows a bank in Santa Fe would operate at a surplus and be able to return money back to the city, as much as $5 million in five years after expenses.

The group estimates the city of Santa Fe spent more than $7 million for bond issuance and fiscal management fees over the past five years and has committed more than $25 million in interest to large investment firms and mutual funds for bond payments over the next three decades.

As far as debt that is already issued, a public bank would have lowered the city’s annual debt service costs by more than $282,000 and reduced its total debt by $52 million by refinancing debt and adjusting the terms when beneficial, according to an analysis by Banking on New Mexico, a working group composed of Lichen, Elizabeth Dwyer, Dan Metzger and Mary Schruben.

NMSU professor Erickson, whose own analysis estimated the bank could have a total economic impact in the city of $24 million in its first seven years, doesn’t doubt the numbers. He said the bonding laws for the state of New Mexico are very inefficient, with Santa Fe borrowing money before it’s spent.

“The big gain is in better management of funds,” he said. “Right now what we do is go out and borrow the funds and pay interest on it, and the funds sit around.”

In Santa Fe, no city official understands the cost of borrowing more than Councilor Joseph Maestas. As the former mayor of the city of Española, he used to sign bond documents that committed taxpayers to borrow and pay back millions for public road and sewer projects.

He said using a bank-like structure to finance the city’s own needs is a pretty simple first step.

“I know for a fact there are exorbitant fees associated with bonding. If we can reduce or eliminate some of those fees, that would be a plus for the city,” he said.

Many residents, however, feel the city has other priorities and don’t see a public bank as one of those. What Maestas tells them is that spending less on borrowing and financing means more money for law enforcement and parks.

“That cost savings is something we really need to consider,” he said.

Villarreal said public banking advocates have also said the city needs to move first with more transparency on where it gets its money and how those dollars are spent. Much of that work has been done, and will continue.

Still, one reason she held back the resolution was to make sure it included input from professional bankers and financial experts, as well as the city’s financial staff.

It has been a year since the bank feasibility study was completed. “Part of the reason we’re taking our time is that we want to make sure it’s correct and we get all the important input necessary,” Villarreal said.

Maestas agrees there is still a widespread misunderstanding about the idea and that advocates need to do a better job educating the public about public banking.

He remains committed to the concept but wants to see more consensus in how the bank would be managed. As an engineer, he also wants a more quantitative measure on whether the bank would accomplish its goals.

“The advocates for public banking I don’t believe have achieved consensus on how to go about creating and managing a public bank,” he said. “When it comes to making decisions about spending taxpayer money, the public expects sound, prudent financial decisions.”

Contact Bruce Krasnow at brucek@sfnewmexican.com.

More about public banking

  • For more information on the proposals for a public bank, visit Banking on New Mexico online at bankingonnewmexico.organd the Public Banking Institute at www.publicbankinginstitute.org.
  • Letters for and against the bank have been published in The New Mexican. To read them, visit our website at www.santafenewmexican.com, and click on “Opinion,” or do a general search for “public bank.”

 

Public bank idea returns for more discussion

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SANTA FE, N.M. — Creating a public bank in Santa Fe – an outside-the-box idea that has been kicking around since Mayor Javier Gonzales first raised it during his election campaign in 2014 – is coming back for a new round of public discussion.

City Councilor Renee Villarreal is calling for the formation of a task force to determine whether the city should move forward with the establishment of a public bank. Two other councilors, Carmichael Dominguez and Joe Maestas, have signed on to co-sponsor Villarreal’s proposal, and a nonprofit group called WeArePeopleHere! continues to push the public banking idea with support from the likes of state Sen. Peter With and school board member Linda Trujillo, recently elected to the state House of Representatives.

But some outside city government and with experience in the banking industry remain skeptical.

“To me, it’s one of those circumstances that sounds conceptually interesting. People say, ‘Why can’t we do this?’ ” Bryan “Chip” Chippeaux, chairman of the locally owned Century Bank, said in an interview this week. “But I think people underestimate the requirements of what becoming a public bank would entail. Plus, it’s one of those deals where you have to ask, ‘Is that the biggest issue Santa Fe has in front of it right now?’ ”

James Lodes, a retired loan officer, said he doesn’t want to see the city rush into anything. “It’s gone from the concept stage to ‘OK, how do we do this?’ ” he said. “No one has stopped to say, ‘Do we really want to do this?’ ”

Elaine Sullivan, president of the board of directors for WeArePeopleHere!, said that’s what’s happening now.

“That’s precisely what this resolution is about,” said Sullivan. “It’s to give it serious thought before we go into this,” she said.

Resolution specifics

The resolution calls for the formation of a task force to “define the process, resources, information and timelines” for preparing an application for a New Mexico bank charter and report back to the City Council in six months. It comes after the city spent $50,000 to contract with a consulting and project management firm that determined that starting up such a bank in Santa Fe was feasible.

The study, conducted by El Paso-based Building Solutions, LLC and the New Mexico State University’s Arrowhead Center, stated that the city could realize a fiscal and economic impact of $24 million in a public bank’s first year of implementation.

Lodes suggested that the feasibility study might have been a way for the city to justify its pursuit of creating a public bank. Lodes said the consulting firm really wasn’t instructed to conduct an objective cost/benefit analysis.

“The feasibility study pointed out things the city could have done to save millions, like paying off loans early and managing the way they drew bond proceeds. Those are the millions in savings the study attributes to a public bank,” he said. “Well, that’s not the bank saving them money, it’s the finance department using the cash more wisely.”

Mayor Gonzales talked about the possibility of creating a public bank while laying out his economic platform prior to his election in March 2014. Three months after taking office, he hosted a forum on the issue and, three months after that, the city staged a day-long symposium on the concept.

“We’re not going to rush into anything,” Gonzales said then, “but we are going to move forward in learning and understanding how to develop a bank in Santa Fe, and being honest about whether we can truly pull it off or not. That remains to be seen.”

More than two years later, it still does.

“You’d have to raise capital and infrastructure, and then be subject to regular examinations. I just don’t see that happening,” said Chippeaux.

It’s a slow process just to get through the application process for a bank charter.

Lodes said a public bank could be a good thing, but “Santa Fe is too small a community to carry the freight all on its own. Doing it on a statewide level or regional level might make sense, because it spreads out that initial startup cost and what’s estimated to be $1 million in operating costs. You’re starting a bank with no capital, you need to have loan loss reserves, so I don’t know how they could do that alone short of a huge gift.”

Initially, at least, the city would be the bank’s only customer, unless there was a collaboration with other entities.

Public banks in ND, Europe

Public banking is not a new concept. The nation’s only public bank, the Bank of North Dakota, is nearly 100 years old and, as of the second quarter of 2016, had built assets totaling more than $7.3 billion. The state has used some of its profits to fund expansion of child care services, financing for rural mortgages and consolidating student debt.

Most recently, North Dakota has tapped the bank for $10 million to help cover unexpected costs for law enforcement’s response to the Dakota Access Pipeline protests.

Public banks are more common in Europe, where there are more than 400 savings banks, as they are called there.

Gonzales has said that a public bank in Santa Fe could help build the city’s social infrastructure by financing such things as broadband expansion, early childhood education programs and health care services.

There’s growing interest in public banks across America, Sullivan said. She provided a list of entities in a dozen states that are considering the idea.

The benefits are numerous, she said.

“Forty to 45 percent of city funds go to Wells Fargo Bank. After that, we don’t know how it gets used,” she said. A public bank would keep the money here and the interest on loans would go back into the bank. Interest paid and earned would stay within the local economy, she said.

“If we keep the money local, we’re using it for our purposes and we’ll be able to see what’s happening to it,” she said. “It’s not a silver bullet, but it would be one piece to the solution to our economic challenges.”

Councilor Villarreal was reluctant to say much about the resolution she’s proposing.

“We’re still working on language so the resolution is consistent and we’re still exploring the mechanics,” she said.

But considering the feasibility study indicated a public bank would work in Santa Fe and public banking has worked elsewhere, she believes it’s worth taking a closer look.

“One of the things we’re looking at are other sources that can fund community projects, instead of always relying on bonds,” she said.

The current draft of the resolution charges the task force with determining what would be the most appropriate kind of bank charter, looking into potential sources and methods of capitalization, and recommending two or more governance models to the City Council. It would also be tasked with identifying a source for the $7,500 bank charter application fee and completing a five-year business plan, a requirement for the bank charter application.

The task force would comprise nine members appointed by the mayor and approved by the council. Its make up would include one city councilor who is a member of the council Finance Committee; the city’s finance director or a representative from that department; someone with legal expertise in the banking industry; another person with federal and state regulatory experience in the industry; three people with local financial and/or banking experience with a local community development financial institution, such as a community bank or credit union; and two residents at large “who have expressed a commitment to the goal of establishing a public bank.”

That would seem to suggest the city is looking mostly for people who have already made up their mind about supporting a public bank.

“That’s one of the sections we need to look at,” Villarreal said, adding that the resolution was still being tweaked before it begins the committee process.

One part of the resolution unlikely to change is a section that calls for the task force to hold at least two public meetings to report on its progress and take public comment before coming back the City Council with recommendations within the six-month time frame.

 

City leaders eye new taxes, more use of utility reserves

By Daniel J. Chacón

 

Santa Fe Mayor Javier Gonzales and at least half of the City Council on Tuesday proposed that the city raise taxes and continue to tap the city-owned water utility in the form of a $4.7 million franchise fee to help close an estimated $15 million budget shortfall.

The proposal, intended to provide city staff with a framework as they draft a budget for the fiscal year beginning July 1, also calls for $4 million in unspecified spending cuts and $2.5 million in increased debt collections and fees to help close a the projected budget deficit.

Meanwhile, Gonzales said during his annual State of the City address that he also wants to use millions of dollars in water utility surplus funds — built up after years of rate increases — to fight poverty and combat climate change.

The mayor proposed that the city invest $50 million in cash reserves from the city water division with the State Investment Council. He declared that he would do “everything in my power” to get city councilors to support what he calls the Santa Fe Verde Fund, an initiative he discussed when he ran for mayor two years ago.

“The Verde Fund will operate essentially as an endowment, generating annual revenue between $1.5 million and $2 million,” he told a crowd at the Santa Fe Community Convention Center. He added that the money could be invested in a way that “ensures it is there when the water fund’s infrastructure and debt requirements need it.”

Gonzales said in an interview that the proposed fund would allow the city to put the money “into a vehicle that will generate revenues” and “start putting more money into our sustainability initiatives and our efforts to fight poverty.”

“Right now, basically it’s earning a fraction, if anything, to house that money in banks that charge us for actually storing that kind of money in their banks,” he said. “This is an effort to really put that money to work while it’s sitting in the water company until we need it in the future to fund these kinds of initiatives.”

Even if the council moves forward this summer with a plan to pay off $34 million in bonds issued to help pay for improvements to the water system, he said, “that will still leave sufficient money to have that $50 million in play for at least the next three years.”

Gonzales also announced plans to ask the council, after it develops a balanced budget, to approve creation of an Early Childhood Commission to oversee a citywide early-childhood education program, including full-day pre-kindergarten. That was another idea he proposed while on the campaign trail.

During his speech, the mayor said that if the proposed commission identifies a need for a dedicated source of revenue and can present a detailed plan that “shows exactly what we would be getting for our investment, I will ask the City Council to enact a portion of our property tax mil levy to back it up.”

In the interview later, Gonzales said, “Right now, we would wait to see how much is needed, if anything. It’s hard, right now, to say what that would be because we don’t know until we get this initiative started what the costs would be and at that point we’ll clearly be able to determine what the impact on a homeowner would be.”

While some councilors declined to comment about the mayor’s proposed initiatives, saying it was the first time they had heard about them or didn’t know the details, his speech generated mixed opinions from audience members.

“Loved the vision, hated the math,” an unidentified woman in the audience said.

The mayor’s remarks came shortly after the council’s Finance Committee voted 3-1 on Tuesday to recommend approval of a deficit-closing “framework” that includes $3.8 million in new taxes. Councilors Signe Lindell, Ron Trujillo and Chris Rivera voted in favor of the proposal while Councilor Joseph Maestas voted in opposition, saying he couldn’t support such a tax hike proposal.

“I think we just need to work a little harder at solving this situation without raising taxes,” said Maestas, who recently championed a 2-cent-a-gallon gasoline tax to raise money for street improvements, which his colleagues shot down in January.

Councilor Carmichael Dominguez, who chairs the Finance Committee Committee, co-sponsored the budget “framework” measure.

“We must move ahead to remedy this deficit,” said Dominguez, who has held office for 1o years and served as Finance Committee chairman for several years. “Tough decisions are always going to have to be made. But the consequences of not doing anything or delaying this, I think, are irresponsible and, quite frankly, in my opinion, they’re very unacceptable.”

The full council is expected to consider a budget resolution at its meeting scheduled for 5 p.m. Wednesday, Feb. 10, at City Hall.

Former Councilor Karen Heldmeyer, who frequently monitors City Hall meetings, said the proposed framework endorsed by the committee will affect all Santa Fe residents financially.

“To raise money in this proposed budget, it’s not just taxes,” Heldmeyer said. “It’s also franchise fees and other increases in rates. Whether it’s a rate or a tax, people are going to pay more.”

Gonzales, who had said in recent months that the city shouldn’t “rush to raise taxes or fees,” said in the interview following his speech that the city has few options.

“The truth is, as we became more involved in the detailed aspects of the budget, it became apparent that we couldn’t cut our way completely out of this deficit,” he said. “It became very apparent that we couldn’t raise taxes to cover it, so it had to be an assortment of solutions that came to the table.”

Lindell called the proposed $4.7 million franchise fee to be charged to the water utility “reasonable.”

“If that were a privately run company, which that’s what we ask enterprise funds to be — to operate as if they were a privately run company — we would be charging that, so it’s reasonable enough to charge that,” said Lindell, the other co-sponsor.

Lindell said she would support a combination of a gross receipts tax increase and a property tax increase.

“The city hasn’t raised their share of the property taxes in this city for eight to 10 years,” she said. “I know that people get property tax increases, but those have come from the county and from the different educational institutions. The city itself has not gotten one cent of increased property tax.”

The proposed framework calls for closing the budget deficit in a year. Other proposals the committee had previously considered called for a multi-year strategy and taking or borrowing money from the Water Division, a practice that councilors voted to end last year.

“We made a promise to the citizens of this city that we would not raid the water fund again,” Lindell said, “and I think that it’s important to keep that promise.”

 

Contact Daniel J. Chacón at 505-986-3089 or dchacon@sfnewmexican.com. Follow him on Twitter @danieljchacon.

 

HOW PUBLIC BANKING IS WINNING THE WEST

 

How Public Banking is Winning the West image

By Matt Stannard

February 19, 2015

You’ll read a lot about activism in this story, but most of it won’t sound terribly sexy or radical. There will be no black masks, no broken barricades or cops bashing skulls. Instead, what you’ll read about is hard work, lots of research about banks and economics and feasibility studies and cost-benefit analysis. There will be meetings, more meetings, and then more meetings. With people in suits even.

This is what the economic justice movement looks like on the inside. A new economy requires financing, and that financing needs to be managed democratically. Public banks are the way we do that.

Public banks are run by local or state governments, without shareholders, with a mandate to support local community banks and fund public goods like schools, city services and small businesses. Wall Street hates public banks because they demonstrate that local governments and communities can manage their money and finance their services without making massive interest payments to big banks.

Currently, there’s only one public bank in the United States, in North Dakota, but there are movements in over 20 states to create more. This story is about movements in four Western states where, because of persistent organizing, meetings, conversations, and a belief that democracy must be materialized, people like you and me have made impressive strides in the campaign to bring public banks to the United States.

Washington: “A Great Step Towards Democratic Control”

The state of Washington has been home to a public banking movement for a while now, with members of the Washington Public Bank Coalition finding a longtime ally in State Sen. Bob Hasegawa. The empowerment in Seattle of one of the country’s most progressive city councils may be decisive in tipping the scales for the public banking movement. The Seattle City Council’s adoption last year of a strong and uncompromising minimum wage ordinance – combined with a city budget that is revolutionary in its scope of social investment and commitment to economic empowerment and community revitalization – makes a publicly-owned financial institution especially appropriate for the city. A series of meetings on public banking took place in Seattle in December, featuring the state coalition, the Public Banking Institute, and several organizations from Seattle and throughout Washington.

I asked City Council member Kshama Sawant about the role of a public bank in financing the City’s vision of economic democracy. “Public banking is a great step towards the kind of democratic control over the economy that is urgently needed for investments in renewable energy, affordable housing and public transportation,” she told me. Fellow Council member Nick Lacata agrees; he recently told the Puget Sound Business Journal, “I think what really resonates with people is that these are public funds. Why are we putting them in private banks that don’t necessarily have the public interest in mind? Why don’t we capture them and put them in public banks that have the public interest in mind?”

Much work remains to be done in Washington where, as in many states, Lacata points out, questions exist concerning the constitutionality of public banks. (The Washington Coalition has concluded that public banks would not violate the state constitution). Sawant and other City officials find Washington citizens’ efforts inspiring in the face of the damage done to America by too-big-to-fail banks. “Wall Street and the big banks looted the economy and destroyed the dreams of millions of working people,” Sawant says. “And not only have these banks not been held accountable, they have successfully clawed back the few meager reforms meant to prevent another crisis like the Great Recession.”

New Mexico: “Dignity, Respect and Control Over their Own Lives”

Santa Fe was hit hard by the 2008 financial meltdown. Chiefly funded by tourism and money from the state, Santa Fe finds both of those sources depleted. Since 2011, the group We Are People Here has been fighting to bring economic democracy to the city. The group’s primary initiative has been the creation of a public bank. Last year, the City of Santa Fe answered the group’s call and agreed to listen to what they had to say. Following a symposium hosted by Mayor Javier Gonzales in September, the city began to seriously consider opening its own bank. Then, on Jan. 28, the Santa Fe City Council approved a feasibility study for such a bank.

It’s “the first official step” in the process, according to Nichoe Lichen of We Are People Here. “It will answer some important questions and compare several models for how a bank might serve Santa Fe.”

But Lichen hopes the city won’t limit itself “to evaluating Santa Fe’s current financial circumstances.” Rather, people should ask about “the risk of loss to public funds with Santa Fe’s current financial arrangements” with no public bank. That’s a fair question, since too-big-to-fail Wall Street banks can now “bail in” and gobble up depositors’ funds if they go under due to losses in shady, speculative deals.

Economic justice advocates in Santa Fe are excited. “Our mayor has taken the lead,” Lichen says. “We are so proud of him. The vast majority of individuals and organizations we have reached out to over the last two years have said this is a no-brainer.” Lichen says community bankers are somewhat uneasy about a public bank, believing it would compete unfairly with local banks, which are encumbered by operational costs and regulations. But a public bank would partner with, rather than compete with, community banks, allowing those banks to expand their portfolios without begging for support from Wall Street. Lichen also fears that officials in Santa Fe will settle for something less: a revolving loan fund that “would not keep our public funds safe from a bail-out or bail-in. It would not help end our debt cycle.”

“We are doing this to provide a more democratic, just, sustainable economy for Santa Fe,” Lichen says, “with dignity, respect and control by the people over their own lives.”

Arizona: “Liberation from Crushing Debt”

Over the past year, Arizonans for a New Economy co-directors Jim Hannley and Pamela Powers-Hannley have met with public officials, made presentations throughout Southern Arizona, and maintained one of the more impressive web sites in the new economy movement. “We are working at the State and local political levels to create a public bank for the City of Tuscon and/or the State of Arizona,” Jim Hannley told me in an email. The group recently met with State Sen. David C. Farnsworth, a Republican, and has been working closely with Sen. Steve Farley, a Democrat who has enthusiastically endorsed the idea. The group has also been engaging with Tuscon City Council members. Jim Hanley reports that Tuscon Mayor Jonathan Rothchild has promised to discuss public banking with Santa Fe Mayor Javier Gonzales.

The effort involves a stream of meetings and presentations with local sustainability and economic interest groups. But that patience and persistence is necessary, because public officials are risk-averse. Historically, when communities have been close to getting a public bank, the Wall Street bankers have parachuted in, filling public officials’ heads with misinformation about the supposed deleterious effects of such a bank (last year’s experience in Vermont is instructive in this regard). Elected leaders, fearing controversy, might conclude it’s not worth the effort.

“The challenge we face is primarily from elected officials who fear public backlash when an ill-informed constituency hears about the founding of a State or City bank,” Jim Hanley told me, and “addressing these challenges means developing partners in community organizations to provide a new distribution channel for our message.” This includes meeting with community bankers, who have more interests in common with their local businesses than they do with Wall Street bankers. The work is worth the effort for the Hanleys and Arizonans for a New Economy. “We are political activists who understand class conflict,” Jim said, “and the role that the banking monopoly plays in ensuring that the 1% continues to dominate all aspects of our country.” The democratization of finance, he said, “can liberate [people] from needless, rapacious, crushing debt.”

Colorado: “Fix this Badly Broken System”

Coloradans have been pushing for public banking since at least 2011, when a group calling itself the Main Street Partnership Bank coalition, made up of state legislators, public and non-profit lending agencies, and economic justice groups, began researching and debating the formation of state- or city-owned banks. On Jan. 31 of this year, a Denver conference entitled “Banking on Colorado” featured leading national figures such as Ellen Brown, Nomi Prins of Demos, and Mike Krauss and Gwen Hallsmith of the Public Banking Institute. Scores of local leaders were among the 120 or so people attending the event, which was sponsored by Be the Change-USA and moderated by Denver City Auditor Dennis Gallagher and Colorado National Bank’s Mike O’Neill.

Earl Staelin, a member of the board of directors for Be the Change-USA, has co-sponsored several citizen initiatives in Colorado to amend the state constitution to establish a public bank. He told me that the Bank of North Dakota was the model for Colorado – a bank that “makes loans in partnership with community banks such as in North Dakota,” and that would “lend for infrastructure, home ownership, student loans at low or no interest, clean energy,” and other public goods. The bank would be prohibited from “speculative investments such as mortgage-backed securities and derivatives.” Now, citizens in Denver, Boulder, Westminster, Englewood and other cities have joined the struggle.

The next steps are formidable. 86,000 signatures are needed to get public banking on a referendum ballot; Staelin’s group wants to collect 115,000 to provide a sufficient cushion for the inevitable challenges to signatures that will follow. Getting those signatures will take resources – petitioner circulators need to be paid, and Staelin guesses “it would likely take several million dollars” to sustain an informational campaign to beat back the propaganda from the big banks, particularly “the two large banking associations in Colorado, the Colorado Bankers’ Association and Independent Bankers of Colorado.”

But the multi-year effort is worth it to Staelin and his colleagues. “Public ownership and control of banks in the public interest,” he told me, “is the most realistic and effective way I know of to fix this badly broken system and to enable the vast majority of our population to thrive in a robust and stable economy, a clean and healthy environment where we have a meaningful opportunity to participate in our democracy.”

Matt Stannard is Policy Director for Commonomics USA and does research for the Public Banking Institute.

This article originally appeared at Occupy.com.