Often accused of being slow to adopt forward-looking ideas, will Monterey get behind public banking?

On April 19, the Monterey City Council will take a second look at public banking, and this time consider throwing a few thousand dollars at a regionally led study to determine whether a Central Coast public bank that encompasses the counties of Monterey, Santa Barbara, San Benito, Santa Cruz and San Luis Obispo is viable, and worth pursuing. The money is available; it would be a rounding error for the city’s large budget.

The plan is envisioned to be modeled much in the same way as Central Coast Community Energy, a publicly-owned renewable energy utility that operates in the same region.

Public banking in America dates as far back as the English colonies, but today the only public bank in America is the Bank of North Dakota, which opened its coffers in 1919 with $2 million in capital.

There has been a push in recent years to re-establish public banking. Gov. Gavin Newsom signed a law – Assembly Bill 857 – on Oct. 2, 2019, to allow for the state or municipalities to establish public banks, which would theoretically facilitate funneling banking profits back into local communities. Another potential benefit would be loans at a lower interest rate to the public agencies that seek them for infrastructure projects or affordable housing.

Locally, the push started in early 2020, with Santa Cruz County Supervisor Zach Friend. He sent letters that year and again in early 2021 to local mayors and supervisors, encouraging them to explore the idea of forming a public bank.

Friend’s letters finally gained traction in early 2021 – he says the first letter “was maybe not a clear ask” but that the second was “more actionable,” setting up a Zoom discussion. The idea ultimately garnered support from local agencies including the Monterey County Board of Supervisors and the cities of Salinas, Seaside and Marina.

But the biggest domino yet to fall – to at least explore the feasibility of a public bank – is the city of Monterey, which currently has an annual budget of about $164 million.

The push in Monterey has been led by councilmember Tyller Williamson, who believes it’s worth considering a public bank for the city. Monterey does a lot of capital improvement projects, and it could save the city money on interest, as well as potentially help fund other items like affordable housing.

“It’s going to be an advocacy effort by people that look into the future,” Williamson says. “The resistance is people comfortable with the management they have now, and responsibilities they have now.”

While he has no idea if City Council will help fund a regional viability study, Williamson feels the city would be remiss not to. The research would give the city data that could shed light on how a public bank could – or couldn’t – help the city achieve its goals.

As far as the cost of such a study – which would include jurisdictions from five counties – Friend estimates it would amount to about $150,000-$250,000.