EDITOR: Aurora is in a funding crisis. We are $20 million in the hole on our infrastructure needs and the much-needed investment into expansion of major roadways is at a standstill. That’s why it’s refreshing to see city council candidates propose innovative and evidence-based policies for funding these projects in Aurora – without increasing taxes. One idea from candidates Juan Marcano (Ward 4), Alison Coombs (Ward 5), and Bryan Lindstrom (Ward 6) is a Municipal Bank. Let’s talk about municipal banks and the remarkable things they’d make possible in Aurora.
Banks are essential to our economy and our flow of money. People need a safe place to keep their savings, and businesses — large or small — cannot operate without loans and lines of credit. A city-owned Bank of Aurora could do the exact same thing: provide our residents and businesses a service, while raising revenue to fund city projects.
It is true that it typically takes many millions of dollars of capital to get started for private banks. But hundreds of millions of dollars in capital already flow through our city’s coffers every year, as part of our standard budgeted operations. Every one of those dollars goes directly to Wells Fargo. That money doesn’t just sit in a vault somewhere waiting for Aurora to pay staff, fix roads, or fund other city functions. Wells Fargo invests that money and profits off those investments until we require it back from them. What if we did that for ourselves?
Banks are money-makers: It’s why twenty of them sit on the Fortune 500 list. Let’s do some quick math. Take our city’s current assets of $457,348,375. https://www.auroragov.org/common/pages/DisplayFile.aspx?itemId=15768260. That’s about 15% of Bank of North Dakota’s total assets–and our city’s population is a little over half the population of North Dakota.The Bank of North Dakota (BND) is a state-owned, state-run financial institution based in Bismarck, North Dakota. It is the only government-owned general-service bank in the United States. The Bank of North Dakota made $145.3 million dollars in 2017. Fifteen percent of $145.3 million dollars is about $21 million dollars. As stated before, Aurora has a shortfall in our road maintenance budget of about $20 million dollars: problem solved.
Along with remedying our existing budget shortfall, the City of Aurora would also be in a better position to create small business loans with low interest, to invest more money into affordable and attainable housing, and to plan for future growth and fund future infrastructure needs.
A municipal bank would also likely keep our money safer and less likely to be embezzled or otherwise subject to corruption. Our entire city budget is published on the City’s website every year. With proper city oversight, we could enjoy remarkable transparency over where our money is going, where it was invested, and whom was doing it. Compare that with private banking, where we have no control over where the money is invested, whom it is funding, or if it’s being misplaced.
Not to mention, public banks are less susceptible to market swings. The Bank of North Dakota helped North Dakota’s economy grow by 7.3% during 2008 (the year the last recession started) — twice as fast as every other state that year except for Wyoming. https://www.forbes.com/2009/06/30/north-dakota-hoeven-business-energy-economy.html#173801b8387b.
Large money interests that take advantage of our current budget and banking processes have a stake in stopping cities, counties, and states from starting their own banks because they will almost certainly cut into their profits. As Ellen Brown of the Public Banking Institute tells us: “. . . the public banking model is simply more profitable and efficient than the private model. Profits, rather than being siphoned into offshore tax havens, are recycled back into the bank, the state and the community.”
We have candidates like Bryan Lindstrom, Alison Coombs, and Juan Marcano that understand this opportunity to be fiscally responsible with Aurora’s tax dollars, while maximizing their impact where they are most needed: our communities. That’s the kind of innovative thinking we need to fix our everyday problems — and it’s what we need on our city council.
Michael Westerberg, J.D., LL.M., a local Tax Attorney.— via [email protected]