VT Votes Yes on Public Banks by Gwendolyn Hallsmith

“If a Vermont Public Bank is organic, grass-fed, and pesticide-free, then I say we should all support it!”  Charlie Hosford, former longtime Waitsfield Select Board member at Town Meeting March 4^th.

Local democracy in Vermont remains untainted by modernity. In small towns all over the state, people gather in small meeting halls, school cafeterias, community centers, and churches to hold their annual Town Meetings on the first Tuesday each March. Every registered voter is welcome, outsiders are not. Except for the clothes people wear, the comfort of central heating (yesterday the temperature outdoors didn’t get above zero degrees Fahrenheit until 10 am), and occasional cable TV cameras, these meetings look and sound much as they did 150 years ago.

The normal topics debated at the Town Meetings relate to budgets, elections, and expenditures. New fire trucks, Road Commissioner salaries, school busses – all of these line items are fair game for approval, amendment, or rejection by the voters. If new ordinances are being considered, these can also be discussed and voted at Town Meeting – zoning, noise, and dog control being common subjects.

But every year, voters across the state bring other, more politically charged, items to the Town Meetings for deliberation. Vermont and other New England states made headlines back in the 1980s when hundreds of towns across the region voted for nuclear disarmament.  In 2002, over 50 towns in Vermont considered an endorsement of the Earth Charter in advance of the international agreement on sustainable development and peace going before the U.N. Summit on Sustainable Development in Johannesburg. Typically, to be considered for Town Meeting, a petition has to be presented to the town in January with at least 5% of the registered voters signing it.

This year, over 20 towns considered a resolution at Town Meeting that directed their legislators to create a State Bank for Vermont, a paradigm changing way of dealing with public money. The legislation pending before the Vermont state legislature would transfer 10% of the tax dollars collected in the state to a publicly held agency called VEDA, for the Vermont Economic Development Authority, and would give VEDA a banking license.

Right now, the state deposits its money in the large, private banks such as Toronto Dominion (TD Bank) and People’s United Bank.  The smaller, state chartered banks in Vermont do not have the capital or collateral to back the State’s $350 million average daily balance. As a result, Vermonters’ money is put to work outside of Vermont – in TD Bank’s case, with investment in the Keystone XL pipeline – a project a lot of Vermonters oppose. While at the same time, the state borrows the money we use for economic development and infrastructure projects from Wall Street.

A small, grassroots organization called Vermonters for a New Economy has been working on a variety of new ideas for economic development in Vermont for a few years, and creating a State Bank has been one of their focal points. Last year, they sponsored a study by the University of Vermont’s Gund Institute for Ecological Economics and the Political and Economic Research Institute at the University of Massachusetts to determine what the economic impact of a State Bank would be on Vermont.

The results of the study were impressive – keeping Vermont’s tax dollars in Vermont and using it for economic development and infrastructure would create over 2,500 jobs, over $190 million in value added productivity, and over $340 million in gross state product.  For a state of 600,000 people, these are significant economic improvements. But for all the benefits, the idea has been opposed by the lobbyists for the large banks, and the legislature has not yet moved forward with it. Administration officials who work closely with the banks have parroted the bankers’ objections – making it sound like a broad consensus in opposition at the highest levels of state government.

To counteract the high powered lobby in Montpelier, Vermonters for a New Economy brought the question directly to the voters. Petitions were circulated through the fall, educational workshops were held for the organizers, printed materials written, and during a national event called New Economy Week in October, towns all over the state hosted kickoff meetings for the Town Meeting campaign for State Banks.

The bankers and their lobbyists didn’t like the end run to voters – one of the lobbyists also happened to be the mayor in Montpelier (the state capital and where I worked as the Director of Planning and Community Development).  Two weeks before New Economy Week began, he wrote a message about the public banking campaign to the City Manager, saying that my advocacy work “really can’t continue,” and continued by saying “I’m not sure I see the point in my meeting with her to outline these concerns. I’ve raised them before with you, I assume they’ve been communicated to her, and nothing has changed.”

But the voters loved the idea. Yesterday, in seventeen towns around the state, a vote to endorse the idea of a public bank passed overwhelmingly at Town Meeting. In Waitsfield, for example after a long day of intense town meeting discussion on a wide variety of issues, citizens voted their support for a Vermont Public Bank by a 2 to 1 margin.

Voters asked a few questions – would politicians run the bank? (No) and what could a public bank do that isn’t being done now? (Use Vermont’s tax money to make loans and infrastructure improvements to earn new revenue for the state).  “A Public Bank for Vermont would create jobs and allow Vermonters to take control over our financial destiny at a time when everyone agrees that Wall Street’s corporate commercial banking model is deeply flawed, at best,” said Rob Williams, a Waitsfield town resident and citizen advocate for the public banking effort.

In Montpelier, where the mayor thought my views were inappropriately “anti-capitalist,” the article on the ballot in support of public banking passed by a wide margin, and got more votes than he did in his bid for re-election. The vote also passed in Albany, Bakersfield, Calais, Craftsbury, East Montpelier, Enosburg, Marshfield, Montgomery, Plainfield, Randolph, Rochester, Ryegate, Tunbridge, and Warren.

What will happen at the State House after Town Meeting Day is an open question. The opposition from the banking lobby and their friends in the administration remains dominant. Scorn for public support from average citizens has also been apparent; in a recent story on Vermont Public Radio, one commentator implied that people with more sophisticated understanding of money matters would have a hard time counteracting what they claim are oversimplified arguments by the proponents. “The arguments against it are not easily addressed in sound bites,” says Cairn Cross, a money manager at Fresh Tracks Capital. “The arguments for it are easily addressed in sound bites through a lot of populist sentiment: Big banks are bad and we need more local autonomy over our money.”

We hope the Vermont legislature takes the common sense wisdom of Vermonters more seriously than the self-interest of the big out of state banks and their supporters. Time will tell, but a new chapter opened for public banking in Vermont yesterday.

Gwendolyn Hallsmith is the Co-founder of Vermonters for a New Economy and the Executive Director of the Public Banking Institute.