It’s time for a state bank in New Jersey

Check out NJ Working Families Director Analilia Mejia op-ed advocating for a state bank. It was originally published in the Star-Ledger.

Murphy’s state bank would help working families, boost local economy

By Analilia Mejia and Dan Fatton

New Jersey has an investment problem.

The Garden State’s numerous credit downgradesbudget shortfallscrumbling infrastructure, chronic underfunding of critical programs and priorities are well known. The source of these issues isn’t a lack of capital or wealth. New Jersey is among the nation’s wealthiest states with a growing millionaire population.

Many argue that Jersey’s credit woes stem from former Gov. Chris Christie’s continuation of ill-advised tax cuts that weakened state coffers, along with an underfunded pension system dating back to the Gov. Christie Whitman years. This irresponsible fiscal policy reinforced backwards, yet persistent notions that hedge funds and enormous corporations should be appeased before tax dollars are invested in small businesses, public services, and working families. New Jersey deposits taxpayer funds directly into Wall Street and foreign banks, coupling tax giveaways with misdirected investments and high fees.

Consider for a moment: whether you believe that our taxes should be lower or higher, your tax money, which is intended specifically to provide public services, ideally aimed at helping residents and maintaining public infrastructure, is filtered through Wall Street bankers and instead used as bonuses for financiers.

As a result, the state of New Jersey paid more than $1 billion in fees and $3 billion in interest to Wall Street for debt services in 2016. Payment of debt costs have been prioritized over meeting the public purpose for which they were borrowed. This system isn’t just immoral – it’s inefficient and irresponsible, a final blow in a line of schemes that Wall Street uses to steal our wages and our tax dollars, and it’s contributed to the stagnation of investment.

Murphy’s budget begins to address this, reinstating tax fairness and investing state dollars in priorities like education and transportation, but intractable structural issues remain.

A publicly owned bank which makes affordable loans to small businesses, directly finances public infrastructure, invests in green energy and efficiency programs, and refinances student loans, would put tax dollars to work properly: supporting New Jersey’s economy from the bottom up.

Access to non-predatory sources of credit for New Jersey small businesses could catalyze an influx in entrepreneurship, access to jobs and opportunities with sustained growth in the communities where it’s most needed.

Despite baffling assertions from former State Treasurer Andrew Sidamon-Eristoff, a Woodstock Institute study, focused in part on New Brunswick, highlights the issue for communities of color. The report found, “If those businesses had received the loans in proportion to their share of all businesses, they would have received over 8,400 more loans totaling over $133.6 million more than they received between 2012 and 2014.”

New Jersey’s public transportation is also in desperate need of investment, and it’s been exceedingly clear that New Jersey does suffer from a lack of access to investment capital for our transit system.

With no dedicated source of funding, NJ Transit effectively cannibalized itself by transferring funds intended for capital expansion projects to cover basic operating costs. In FY 2017, New Jersey made more capital-to-operations transfers than Chicago Transit Authority did in the entire 5-year period leading up to 2010. Investment in capital projects, including public transportation, declined to 1.4 percent of New Jersey’s economy in 2013, dropping New Jersey to 5th lowest for vital infrastructure investment nationally.

During Christie’s tenure, 1.3 billion dollars were siphoned out of the Clean Energy Program, which offers financial incentives for businesses and residents to adopt energy saving measures; Murphy continues that trend, though at a lesser level. A public bank could make sweeping investments in energy efficiency and building upgrades to optimize public facilities like schools, creating more than three times the jobs that similar investments in fossil fuel projects create.

On top of all this, the dominance of big banks has forced many community banks and credit unions, primary lenders to small businesses and community interests, out of the market. The Bank of North Dakota, the only public bank currently operating in the U.S., has consistently worked as a partner with smaller lenders making investments through credit unions and community banks.

For reducing Wall Street’s influence, shoring up state finances, and bolstering community banks, it’s imperative that New Jersey create a public bank, one that invests in enterprises within our communities, improving our infrastructure, and our future.

Analilia Mejia is executive director of New Jersey Working Families Alliance, a non-partisan, progressive, political organization which educates and mobilizes voters to vote their values 

Dan Fatton is executive director of New Jersey Work Environment Councila coalition dedicated to safe, secure jobs and a healthy, sustainable environment.