SB 5188,establishes a Washington state financial cooperative efforts to provide greater local government capital financing.

The state bank, now referred to as a state public financial cooperative, may issue debt as a cooperative membership organization to support state, local, and tribal governmental entities. The bank would help address the multibillion-dollar deficit local governments face to support and expand critical infrastructure and economic development projects by issuing low-interest loans.

As we previously reported, a state bank has long been a focus of heated debate within infrastructure funding circles. Many of the services the proposed bank would provide are already available (either entirely or in part) through existing state government programs or private financial institutions. In fact, Washington has more than 80 programs and subprograms administered by 12 agencies that provide financial support to local governments in the state.

One such state government program is the Public Works Trust Fund (PWTF)—a revolving loan program AWC has championed for years. Many of our small and medium cities rely on the program for critical infrastructure safety improvements.

However, as a result of the McCleary decision, the available PWTF funds are chronically diverted: in the 2019 legislative session, legislators diverted an additional $160 million. That year, the fund received loan applications totaling over $250 million. Only $81 million in projects were funded.

AWC supports efforts to allocate greater funds for city infrastructure but is concerned with costs and the potential financial burden imposed on cities, unmitigated risks, and outstanding questions about how a bank would be structured and funded.

Date to remember

SB 5188 is scheduled for public hearing in the House Consumer Protection and Business Committee on March 17 at 8 am.