State treasurer talks about state finances, closing the wealth gap and new legislation

This was not the first time Washington State Treasurer Mike Pellicciotti has visited the San Juan Islands. It is, he said, one of his favorite places.

Thursday, Sept. 8 was an official trip, however. He has been meeting with county treasurers across the state to discuss the Washington Future Fund and listening to the concerns of his constituents.

“I love, love this job,” Pellicciotti said. “When we do it right, focus on working families, retirees, we are able to move things in a significant way to make a difference for them.”

In speaking with Friday Harbor folks, like staff from the Economic Development Council of San Juan County and members of the Friday Harbor Chamber, Pelliccotti said he has really learned the importance of the ferry system and what it means not just to individuals living their lives, but to businesses and the economy as well.

One of the reasons he has been on the road is to talk about the Washington Futures Fund. If it passes through the legislature, the fund would create a committee to study wealth inequality and a final analysis of all legal and economic issues related to the proposed 2023 Washington Future Fund legislation.

The Washington Future Fund is based on the “baby bonds” model conceived by economist Darrick Hamilton. The proposal would invest $3,200 for every child born under Apple Health, Washington State’s version of Medicaid.

Approximately 47% of Washington babies are born under Apple Health, according to Pellicciotti, and San Juan and Skagit counties have a statistically higher rate than other counties. The Futures Fund could have a huge impact on island families.

Pellicciotti explained that a 13- or 14-year-old who comes from a low-income family may not have high hopes for their future, but with these baby bonds, it could be life-changing.

“It is transformative at an early stage when it could be very impactful,” Pellicciotti said of the bonds.

The concept is that the state would invest in baby bonds until the individual became 31. The child could claim the money as soon as they turned 18, however. During those two decades, the bond could have grown to be worth over $10,000.

“It would not come in the form of a check,” Pellicciotti said.

Instead, the individual could use it toward education or as seed money for a business or property. They would have to be a Washington resident at the time they claimed it, use the funds in Washington and it would be inserted into a current Washington program. Pelliccotti added that since this is a long-term program, it is important to remember that available programs and the way funds are distributed will change during that time. Futures Fund would work to close the wealth gap, providing access to capital to Washington residents who have not previously had it.

“We want to get funds to those who need it most, and close the generational wealth gap in an efficient and targeted way,” Pelliccotti explained.

It also benefits the state, following the notion that by helping one’s neighbors, the community as a whole will benefit.

“As treasurer, my outlook is that as I look forward 10, 20 or 30 years from now, our treasury is going to have pressure put on it if we don’t get ahead of the wealth gap now,” Pellicciotti warned. “This is our chance to right that ship.”

He also discussed the Local Option Capital Asset Lending Program. LOCAL helps finance small community projects like new roofing or vehicles for fire districts, expanding libraries or purchasing land for parks. LOCAL pools together similar projects to reduce future interest costs. This allows more taxpayer dollars to be kept in local communities. According to Pelliccotti, Lopez Fire District 4 was recently able to purchase much-needed new firetrucks through the LOCAL program.

“Where it helps the most is when the size of the community prevents them from being able to achieve the projects. LOCAL helps make it cost-effective,” Pellicciotti said. “It means the difference between having that firetruck, ambulance in smaller communities where first responders critically matter.”

Visiting counties across Washington has not been all Pellicciottti has been up to. He recently traveled to Washington, D.C. to advocate for the Safe Banking Act.

Although many states have legalized Cannabis in some fashion, according to Pellicciotti, federal banking laws prevent marijuana businesses from accessing banks the same way other industries do, and are therefore forced to only take cash from customers.

As a result, pot shops, which are now a 1.4 billion-dollar-a-year industry in the state, have been targeted by robbers. He added that while he was in D.C. he told one lawmaker it was only a matter of time before someone dies as a result of the burglaries. Days later an employee of a Tacoma, Washington shop was fatally shot.

“It is nuts. It does not make sense from an accounting perspective, for workers’ safety and it can be resolved by the Safe Banking Act,” Pellicciotti said, adding that he is confident it will be passed by Congress this year.

If it is passed, he continued, it would not be an insignificant action, as there has not been federal legislation passed surrounding marijuana in 50-plus years. Passing the banking act could reflect shifting perspectives on the drug federally.

While the Journal had his ear, Pellicciotti was also asked about the status of Washington’s economy and the impacts of inflation.

“I started raising the alarm bells about inflation over a year ago,” he responded, explaining that due to his concerns he refinanced as much of the state’s debt as he could, locking in low-interest rates and saving $305 million dollars.

“That money would have gone to Wall Street in wasted payments rather than going back to the people of Washington to do good things,” Pellicciotti said.

As a result, local governments are seeing millions more being returned than they did even a year ago.

“(San Juan County Treasurer) Rhonda Peterson said she is so much happier with the returns coming in,” Pellicciotti said, reiterating that refinancing state debt and locking in low-interest rates has had tangible benefits for people on the ground.

Even with inflation, his assessment of the state economy was positive. He attributed at least some of that to the diversity of Washington’s economy as well as good governance and how state finances have been handled.

“For all the problems of the world, state finances is not one,” Pellicciotti said.