State Bank of West Virginia
What WV Can’t Wait ForWe will build a fair and sustainable economy with a state bank that keeps our wealth here and benefits our people, rather than out-of-state interests.
Whose Side We’re On
- West Virginia Taxpayers
- Local West Virginia Businesses
- West Virginia Farmers
- West Virginia Inventors and Entrepreneurs
... and more. Click the links above to read stories from the trail.
What We’re Up Against
Small businesses account for about 99% of total businesses in the state and employ about half of the work force. Without funding, these businesses cannot operate: startups don’t start up, entrepreneurship is curtailed, growth is hindered, and people flee the state for better opportunities elsewhere. Yet most of our state is classified as a “lending desert.”
A state bank will address this problem by increasing local lending to small businesses and farms, funding entrepreneurs and startups, and eliminating our state's lending desert. We will invest in projects that not only improve West Virginia communities, but promote economic diversification and create jobs.
State banks make credit easily available to start new businesses and expand existing ones--and they're guided by three principles:
- Working in the interest of the public, not private shareholders
- Maximizing sustainable lending, not profits
- Keeping capital local, to benefit our communities
These principles ensure that state money is enlisted to work for an economy that creates value for West Virginians, not for Wall Street's speculative financial markets.
The Bank of North Dakota (BND) is an example of how this can work. Chartered in 1919, the BND is the driving force of the North Dakota economy. Because of the BND, North Dakota can recover from budget shortfalls with mechanisms not available to most states, the bank itself acts as a Rainy Day fund. Even better, the BND has posted record profits annually for the past decade and a half, including throughout the financial crisis, recently delivering 17% returns on investment.
Instead of sending all our wealth away to millionaires and billionaires who couldn't care less about us, with a State Bank of West Virginia, we will invest in ourselves: in small businesses, small farms, entrepreneurs, rural infrastructure, sustainable industries, young West Virginians, veterans, and more. We'll finally invest in the long term good of our people.
- Establish State Bank of West Virginia. This bank will be modeled in part after The Bank of North Dakota with the goals of:
- Keeping tax dollars invested in our own state instead of enriching Wall Street and out-of-state corporations.
- Funding rural infrastructure projects such as water, energy, and broadband--all things that will improve the quality of life in our communities and benefit businesses as well.
- Through the Small Business Revolution plan, investing in innovative, small businesses that are the heart of regenerating our communities.
- Providing loans for our small family farms to innovate and prosper.
- Providing loans for safe, energy-efficient affordable housing and energy efficiency upgrades for our communities.
- Initiating and refinancing student loans for the young people of our state by administering the Take Me Home plan.
- Providing lines of credit as a rapid response to emergencies such as flooding.
- Protecting the pensions of our state employees and our economy through sound investments here in West Virginia.
- Investing in arts and culture initiatives.
- Saving our state millions of dollars in interest that citizens are now forced to pay on the Jim Justice Road Bond and other loans.
- Promoting partnerships with critical, local community banks to help ensure their continued success.
- The West Virginia State Bank will function as a social wealth fund, benefiting the people of West Virginia like Alaska's "citizens' dividend" benefits Alaskans. Specifically, half of the Bank will be owned by the people of West Virginia, producing dividends directly to the people of the state, akin to the Alaska model. The other half of the Public Bank will operate in the manner of the Bank of North Dakota, producing revenue for state government, saving costs on infrastructure programs, smoothing disaster rapid response, and offering competitive loans to West Virginia entrepreneurs. The Bank will build wealth over time, through the following:
- Establish a West Virginia Resiliency Fund within the State Bank to provide small businesses and non-profits with emergency financial support during the pandemic and pandemic recovery, with Resource Navigators to provide professional guidance through the process so that West Virginia businesses and organizations are aware of and can apply for any support resources for which they’re eligible.
- Create a microbusiness recovery program specifically targeted to rural areas, and available to businesses that have fewer than five employees and less than $250,000 in annual gross revenue.
- Create a Bank Advisory Board. Our State Bank’s business model will represent the interests of the people, and provide insulation from the whims of purchased politicians and the influences of large, out-of-state interests.
- Require companies providing 401K options in West Virginia to include an option that invests in the state bank. Instead of paying dividends to Wall Street, we will be paying dividends to the State Bank's only shareholder: our people.
How We Pay For It
This is ultimately a revenue positive plan. See, for example, the BND’s 2017 annual report showing it’s 14th consecutive year of record profits, with $145.3 million in net earnings. BND has accrued 7 billion in assets and $825 million in operating capital over time.
That said, the question of how to initially capitalize a public bank of West Virginia stands, but there is no shortage of existing sources of capital for the bank. Here are five possibilities.
- Cannabis revenues. With medical cannabis sales scheduled to begin in 2021--and full cannabis legalization in our plans--all or part of any revenues collected from cannabis sales or licensing could be used to capitalize the Bank.
- New revenue streams. Some portion of gains from the new tax code, or the new wealth tax, could be diverted towards the initial capitalization of the state bank.
- Treasury assets. The state treasury manages many assets. Any of these monies could be withdrawn in whole or in part from their current investments or deposits and invested instead in our own people, to capitalize the bank.
- Investment Management Board assets. The West Virginia Investment Management Board manages roughly $19 billion. A portion of these investments could be invested in the state bank to serve as capitalization.
- Rainy day fund. The state has set aside over $700 million in reserves to draw on in the case of budget shortages or an emergency. Because we will still be able to draw on those reserves during an emergency, a public bank essentially acts as a Rainy Day fund by issuing the state a line of credit in times of need. It will more efficiently and directly offer no- or low- interest loans for disaster relief. This fund could also capitalize the bank. The case of the Red River flood in North Dakota and Minnesota is instructive of how this can work: after devastating flooding on both sides of the river, the Bank of North Dakota, a public bank, immediately created a line of credit, issued low interest loans, and offered loan relief in Grand Forks. This enabled quick rebuilding and the preservation of tax base with less than 3% loss. In contrast, Minnesota’s East Grand Forks across the river had no such program and lost 17% of its tax base.
Every one of our New Deal plans was written by West Virginians.
- Our volunteers asked 11,000 of their neighbors, “What would you do if you were Governor?”
- Our candidates attended 197 Town Halls, taking notes in community centers, church basements, union halls, and small businesses.
- Educators met after work to start sketching out their perfect school.
- Nurses traded ideas on the picket line.
- Our county and constituency captains ratified a first platform in the fall of 2019 and updated it in the spring of 2020 to reflect the current pandemic.
But the legacy of this New Deal dates back to John Brown and Mother Jones, to the United Mine Workers of America and the suffragettes, to the Poor People’s Movement and the CIO.
No one politician or slate of candidates can win this plan alone. We need you.
If you have an idea for how to make this plan stronger, or if you would like to lend a hand to win it, contact our candidate for Governor Stephen Smith at email@example.com.