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Wasteful budget dust: State bank and dam breaching studies

About the Author
Jason Mercier
Director, Center for Government Reform

By the time you read this, the 500 plus page House and Senate operating budgets may already have been voted on despite just being released on Monday. With most of the attention being focused on the big-ticket items driving the proposed $1 billion plus increase in spending, I want to highlight a couple of budget provisos commonly referred to as “budget dust.”

The first is the ongoing effort to create a taxpayer funded state bank. Having repeatedly failed to pass bills authorizing a state bank, lawmakers instead have been funding numerous studies to help justify their call to create a government run bank. Here is the recent budget history on this effort.

The 2017-19 budget provided the State Treasurer $75,000 “to establish a task force on public infrastructure and a publicly-owned depository” (Section 122). The Treasurer used a fraction of that money providing an opinion that stated there were substantial risks, regulatory burdens, and adequate infrastructure programs already in place. For these reasons the report concluded: 

“The State Treasurer is not in favor of spending even more state resources towards creating a state bank.”

Following the completion of the 2017 task force, in 2018, the Treasurer’s Office independently completed a full analysis of public bank studies that have been completed in 13 states and municipalities around the country, including the City of Seattle. That report concluded:

“After careful review of each study, OST fully recommends against adopting a public banking system. ‘The Office of the State Treasurer supports building upon Washington’s existing structure of banking and does not support public banking because of the higher risk and lower return on investment compared to the current private banking system.’ - Washington State Treasurer Duane A. Davidson”

Not satisfied with the answer provided by the State Treasurer, lawmakers came back in the 2018 supplemental budget and provided OFM with another $480,000 to again study a state bank (Section 129).

Apparently still not satisfied with the answer, the original 2019-21 budget gave another $100,000 to the University of Washington Evans school (Section 606) “to complete the business plan for a publicly owned Washington state depository bank…”

And now we have the new Senate proposed 2020 supplemental budget providing yet another $250,000 (split between House and Senate) for: “A joint legislative task force is created to develop a business plan for the establishment of a publicly owned depository/state bank in Washington state.”

An amendment was proposed by Sen. Schoesler last night during the Senate Ways & Means meeting to remove the funding for the state bank study but it was rejected.  

The apparent endless appetite to spend taxpayer money studying a state bank until they get the answer they want isn’t the only questionable use of “budget dust” by lawmakers.

At the request of Governor Inslee, the original 2019-21 budget provided $750,000 so the Governor could study “issues associated with the possible breaching or removal of the four lower Snake river dams…”

That money was split evenly between two years. The completed report, however, is due in early March calling into question why the Governor still needs $353,000 (already spent $397,000 on study) for the effort.

In fact, when asked this question by a reporter the Governor’s office responded:

“Both the House and Senate chair budgets leave $353,000 for the second year of the biennium for Lower Snake River stakeholder engagement. We anticipate that the final report will be released in early March.  At this time the governor’s office does not have any plan for expending the $353,000. Neither the House nor the Senate have provided any additional direction on the expenditure of these funds in their 2020 Supplemental budgets.”

So, the final report is nearly done, the Governor has no plans to spend the remaining $353,000 and the legislature hasn’t provided direction on how to. Sounds like this money is no longer needed and the authority for the Governor to spend it should be removed when adopting the 2020 supplemental, right?

As of now, however, both the House and Senate proposed supplemental budgets continue to provide the second year $353,000 Snake River dam breaching money to the Governor.

At some point this wasted “budget dust” adds up to real taxpayer money.

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