Monday, December 17, 2012

Colorado could save millions with its own Bank

Ed: Are you aware of the "State-owned Bank Initiative"? Colorado could save millions by following the lead of North Dakota, which has proven the concept works well. Here is an update from those working to get this on our ballot for the future.

Each of you has expressed interest in the idea of a state-owned bank in Colorado along the lines of the Bank of North Dakota.  This is to update you on progress of that idea in 2012.  As most of you know, planned legislation to establish a state-owned bank in Colorado in 2012 did not materialize.  As a result, Bob Bows, who is on the board of the Public Banking Institute, and I became the co-sponsors of two initiatives in 2012, one to amend the Colorado Constitution to establish a state-owned bank, and the other to amend the Colorado Constitution to authorize political subdivisions to establish their own banks.  We received valuable assistance on our proposed initiative to establish a state-owned bank from Marilyn Barnewall, a Republican with a strong banking background, who has done and is still doing much to publicize the importance of this issue for Colorado and the country.  We believe this is truly a multi-partisan issue, appealing to Republicans, Democrats, Libertarians, and Green Party members, among others. 
Our initiatives went through each step of the process --- the Colorado Legislative Council, the Secretary of State, and the Title Board.  As we anticipated, our only opponents were the two main associations of banks in Colorado.  The Title Board ruled in favor of our initiatives on each issue that the banking associations raised.  The banking associations then filed an appeal to the Colorado Supreme Court, raising a number of issues.  We timely filed our responsive briefs on May 29th and May 30th.  The Supreme Court on June 10th issued an order saying they would reverse the action of the Title Board and would file a written opinion explaining their reasons.  Under the statute governing initiatives in Colorado the Supreme Court is supposed to rule on such measures promptly, but to date, over six months later, they have still not issued their written opinion.  On behalf of Bob and me as proponents I filed a Motion to Expedite the Court’s Written Opinion on December 14, 2012, because we need the written opinion in order to know how to proceed in 2013 or 2014, and the opinion is long overdue.  We would have reported back to you sooner, but without the court’s written opinion explaining its action there was not much to report. 
In the meantime, we learned of some reasons that a state-owned bank might possibly work as a “TABOR enterprise”, a way to get around possible problems under TABOR (Taxpayers’ Bill of Rights, a provision of Colorado’s Constitution that restricts the raising of revenue and the level of expenditures).  We realize we need to learn more about the workings of a TABOR enterprise in order to know whether it is practicable and feasible under the law governing the TABOR amendment.  So we’ll be looking into that and perhaps setting up a meeting to discuss various alternatives for proceeding further in 2013 or beyond. 
I am attaching a summary of our 2012 initiative proposal to establish a state-owned bank in Colorado which explains its benefit, and that we had planned to use as a flyer once our ballot measure was approved.  We believe the idea of a state-owned bank in Colorado could promptly turn around the state economy in Colorado, restore full employment, put people back in their homes, refinance student loans at affordable rates, strengthen the state budget, restore bank lending to Colorado businesses desperately needing such funding, and eventually to enable a reduction of the tax burden on Colorado citizens.
Please let us know any thoughts, suggestions, or questions you may have on this important subject.
In a separate email you will be invited to sign a petition initiated by Bob Bows through to urge creation of a state-owned bank in Colorado.  We strongly urge you to sign this petition and to invite others to do so as well. 
Thanks very much for your interest and cooperation. 

Ballot Initiative #95 -- to Amend the Colorado Constitution to Establish a State-Owned Bank
for the State of Colorado - Modeled on the Bank of North Dakota
Since 1919 North Dakota has owned its own bank, the Bank of North Dakota (BND), which holds all fees and taxes collected by the government of North Dakota and invests it through loans made through or in conjunction with private community banks for industry, agriculture and other services needed by the citizens of the state. This has produced many advantages:
* BND has paid the state treasurer >$325 million from bank profits over the past 10 years; $61M in 2010
* ND is the only State with continuous budget surpluses since before the financial crisis of 2008
* North Dakota has the lowest unemployment rate (3.0%) of any State in the U.S.
* North Dakota has one of the lowest home foreclosure rates and credit card default rates in the U.S.
* In FY 2010 BND enjoyed a 19% return on investment
* North Dakota has had no bank failures and has the most community banks per capita
* Banks in Colorado are failing five times more often on average than banks in other states
* In 2011 North Dakota enjoyed almost $500 million in tax cuts and 30% in cuts over 2009-2011
* These benefits are not due primarily to North Dakota’s oil; e.g. Alaska and Montana have as much oil but have high unemployment >7.7%, and have had budget deficits
The proposed Colorado Amendment would add §22 to Article X of the Constitution of the State of Colorado:
Establishment of State-Owned Bank. The measure establishes a bank owned by the state of Colorado. The bank is authorized to lend money at interest or at no interest to promote development, commerce, industry, and agriculture in the state and to promote home ownership, maintenance and construction of needed infrastructure, education, public health and safety, and other purposes for the general welfare of the citizens of the state of Colorado. The bank will have the same powers as other banks chartered by the State and the power and authority to deposit public revenues and funds in the bank, except as expanded or limited by the General Assembly. The bank would not be subject to any revenue or spending limits such as under TABOR, but the measure would not alter TABOR’s restrictions on new tax measures. The bank would be regulated, managed, and advised by public officials, banking professionals, and public representatives, and be subject to annual public audits. It would be backed by the full faith and credit of the state.


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