By Vetoing Task Force on Creation of State Bank, Kotek Sends a Signal - Willamette Week

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Gov. Tina Kotek issued a short list of bills July 28 that she plans to veto in whole or in part.

Only a couple of bills made the list, but like her veto of a study of decriminalizing sex work, Kotek’s plan to veto House Bill 2763 illustrates her pragmatic approach to governing.

HB 2763 would have created a task force to study the creation of an Oregon state bank. It’s an idea the left wing of the Democratic Party has pursued off and on for decades (a lobbyist for the Oregon Bankers Association testified it’s been at least 40 years) and consistently since as long ago as 2009. The bill passed both chambers on largely partisan votes—Democrats for it and Republicans against.

Proponents of the concept, led this year by state Rep. Mark Gamba (D-Milwaukie), Sen. Jeff Golden (D-Ashland) and Rep. Jules Walters (D-West Linn), argued that a state bank could capture many of the profits commercial banks earn from providing services to government and greatly expand public financing for worthy projects.

“Unlike a privately owned bank, which prioritizes shareholder returns, public banks leverage their deposit base and lending power to benefit the public good,” Gamba testified. “This shifts their focus from short-term profits to pressing needs like affordable housing, small-business loans, and public infrastructure projects such as rebuilding after wildfires and floods.”

The bill even generated support from one of Kotek’s biggest backers, the Oregon Education Association. “A public state bank in Oregon could be a powerful equalizer and play an important role in reaching communities that have historically faced barriers to credit and banking,” OEA lobbyist Michelle Ruffin testified.

Alone among the states, North Dakota operates a state bank. (The Oregon Constitution appears to prohibit the formation of one, a roadblock the Democratic Party of Oregon has suggested removing.)

The state treasurer in Washington, Duane Davidson, produced a report in 2018 that looked at all the previous studies of creating state banks. His conclusion: not a good idea.

“The evidence from this and other municipalities’ studies has established there is too much taxpayer risk, and not nearly enough proven benefit from the formation of a state bank,” Davidson wrote.

It is sometimes said government exists to do what the private sector won’t. In his 2012 State of the Union speech, for instance, President Barack Obama said, “I’m a Democrat. But I believe what Republican Abraham Lincoln believed: That government should do for people only what they cannot do better by themselves, and no more.”

That’s a sentiment Kotek appears to have absorbed, at least when it comes to a state bank. It’s worth noting, of course, that her impending veto comes on the heels of the stunning failures of some previously high-flying banks earlier this year: Silicon Valley Bank (March 10), Signature Bank (March 12), and First Republic Bank (May 1).

Kotek’s office couched her imminent veto of the state bank task force in a hearty portion of word salad: “While the governor supports exploring the creation of a state bank, this bill has several logistical challenges, including directing the Oregon Business Development Department, which already manages over 80 programs, to manage a new task force, establish an RFP process, and finalize a substantive report on an abbreviated timeline.”

Bottom line: It’s dead. Discretion, the governor appears to have decided, is the better part of valor.

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By Vetoing Task Force on Creation of State Bank, Kotek Sends a Signal - Willamette Week
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