State Owned Financial Institutions 2011 Legislation

Last Updated: November 18, 2011

NCSL Staff Contact: Heather Morton, 303.364.7700 (Denver)

With the struggling economy, state legislators are investigating state-owned banks, similar to the Bank of North Dakota, as a way to encourage economic development and generate revenue. This kind of institution is also known as a public or partnership bank. The Bank of North Dakota, formed in 1919 by the North Dakota Legislative Assembly, is the only state-owned bank operating in the United States.

In 2011, 23 bills and resolutions were introduced in 15 states to study the issue or to create a state bank or investment trust.

Related NCSL Webpages:

AZ | CA | HI | IL | LA | ME | MD | MA | MT | NV | NH | NM | NY | OR | WA

H.B. 2221
Creates the Bank of Arizona and establishes duties of the Bank of Arizona Commission and Board of Directors.


A.B. 750
Vetoed by governor 9/26/11
This bill establishes the investment trust blue ribbon task force to consider the viability of establishing the California Investment Trust, which would be a state bank receiving deposits of state funds. The task force would be required to consider how the investment trust could strengthen economic and community development, provide financial stability to businesses, reduce the cost paid by state government for banking services, and provide for excess earnings of the trust to be used to supplement general fund purposes. The bill establishes the membership of the task force, which would include the secretary of Business, Transportation and Housing, or his or her designee, and specified individuals with a background in finance appointed by the Legislature, and the governor, controller, and treasurer, or their designees, and would require the task force to be staffed by an organization selected by the task force that is a nonprofit corporation, or other private corporation that has specified expertise, including expertise in public finance and public institutions models. The bill requires the task force to report to the Legislature by December 1, 2012, on specified issues relative to the California Investment Trust, including, among other things, its recommendations relating to the viability of establishing the trust, and its impact on state government services, as specified.

District of Columbia
Not Available

H.B. 853
Passed House 3/8/11
Establishes a task force to review, investigate and study the feasibility and cost of establishing the bank of the state of Hawaii. Requires reports to the Legislature.

H.C.R. 159
Passed House 4/15/11
H.R. 139
Adopted 4/15/11
Creates the task force on establishing the bank of the state of Hawaii.

S.B. 194
Establishes the state bank of Hawaii for the purpose of promoting agriculture, education, community development, economic development, commerce, and industry within the state.


H.B. 2064
Creates the Community Bank of Illinois Act. Provides that the Department of Financial and Professional Regulation shall operate the Community Bank of Illinois. Specifies the authority of the advisory board of directors to the Bank. Provides that the secretary is to employ a president and employees. Contains provisions concerning the removal and discharge of appointees. Provides that state funds must be deposited in the Bank. Contains provisions concerning the nonliability of officers and sureties after deposit. Specifies the powers of the Bank. Contains provisions concerning the guaranty of deposits and the Bank's role as a clearinghouse, the authorization of loans the General Revenue Fund, bank loans to farmers, limitations on loans by the Bank, the name in which business is conducted and titles taken, civil actions, surety on appeal, audits, electronic fund transfer systems, confidentiality of bank records, the sale and leasing of acquired agricultural real estate, and the Illinois higher education savings plan. Provides that the Bank is the custodian of securities. Amends the Illinois State Auditing Act to require that the auditor general must contract with an independent certified public accounting firm for an annual audit of the Community Bank of Illinois as provided in the Community Bank of Illinois Act. Amends the Eminent Domain Act to allow the Bank to acquire property by eminent domain.


H.C.R. 144
Passed House 6/2/11
Requests the state treasurer and the Office of Financial Institutions to jointly study the creation of a state-owned bank.


L.D. 1452
This bill establishes the Maine Street Economic Development Bank effective July 1, 2013 except that the bank may not make, purchase, guarantee, modify or hold loans until the bank has adequate capital of at least $20,000,000. It specifies the purposes of the bank, establishes a board of directors and creates an advisory committee. It allows the bank to accept deposits of public funds, to make, purchase, guarantee, modify or hold certain loans and to serve as a custodian bank. It directs the state treasurer to deposit money into the bank in an amount the state treasurer determines is necessary to allow the bank to fulfill its duties. Excess income of the bank is deposited in the Maine Budget Stabilization Fund. The bill provides for a quarterly examination by the Department of Professional and Financial Services, Bureau of Financial Institutions and an audit by the state auditor every two years. The bill directs the state treasurer and the commissioner of Administrative and Financial Services to consult with the attorney general and report to the Joint Standing Committee on Appropriations and Financial Affairs by January 15, 2012 with recommendations to fully implement the bank. It authorizes the Joint Standing Committee on Appropriations and Financial Affairs to report out a bill to the Second Regular Session of the 125th Legislature.


H.B. 1066
S.B. 789
Establishes the Maryland State Bank Commission to review and evaluate the creation of a Maryland State Bank; provides for the membership and staffing of the Commission; prohibits members of the Commission from receiving specified compensation, but authorizes the reimbursement of specified expenses; requires a final report by a specified date.


H.B. 1192
Creates the Bank of Massachusetts.


H.B. 643
Missed deadline for revenue bill transmittal 3/30/11
Creates a state Bank of Montana as a new agency within state government; provides duties for the state bank; creates a state debt; exempts the bank president from the state pay classification system; revises distribution of interest income on coal severance tax collections and the coal severance tax trust fund; revises distribution of volume cap bonds; revises duties of the Department of Commerce, the Board of Housing, the Montana Facility Finance Authority, the growth through agriculture program, and various economic development programs; provides for $15 million in revenue bonds for startup financing; provides for a transition from grants to loans for the treasure state endowment fund, the treasure state water fund, and the economic development fund; provides a transition for the bonding authority of the Board of Housing and the Montana Facility Finance Authority; provides rulemaking authority; provides a statutory appropriation.

H.J.R. 25
Passed House 4/13/11
Requests an interim study of investment and banking changes necessary to create a state Bank of Montana similar to the Bank of North Dakota.


S.B. 341
Directs the Legislative Commission to appoint a subcommittee to conduct an interim study concerning the establishment of a bank that is owned, controlled and operated by this state.

New Hampshire

H.B. 430
This bill establishes a committee to study the feasibility of establishing a state development bank in New Hampshire.

New Jersey
New Mexico

H.B. 290
Enacts the Small Business Development Bank Act; creates the New Mexico Small Business Development Bank; establishes the small business development bank board; provides powers and duties; authorizes loan participation agreements with community banks for economic development projects; provides for the investment of a portion of the severance tax permanent fund in the New Mexico small business development bank; provides penalties.

New York

A.B. 6737
Establishes a commission to study the feasibility of establishing a bank owned by the state of New York or an authority constituted by the state of New York and report within two years.

North Carolina
North Dakota

H.B. 2263
Creates the Task Force on Establishing State Bank of Oregon. Directs the task force to undertake studies and make recommendations on establishing a state bank for Oregon that is modeled on the Bank of North Dakota. Sunsets the task force on date of convening of 2013 session.

H.B. 2972
Establishes the Bank of the State of Oregon. Specifies the purposes of bank. Establishes the Bank of the State of Oregon Board to operate and manage bank. Creates an advisory board of directors to advise bank board and management on operation of bank. Requires the bank to accept deposits of public funds and permits bank to accept deposits of other funds. Permits the bank to make, purchase, guarantee or hold certain loans and to serve as custodian bank. Specifies other powers. Directs the state treasurer to deposit moneys in bank in amount treasurer determines is necessary to allow bank to fulfill duties. Requires the Bank of the State of Oregon Board to determine and reserve amount of revenue necessary to continue bank operations in safe and sound manner and to credit remaining revenue to use for general governmental operations. Directs the board to adopt rules to ensure safety and soundness of bank, describe permissible investments, bank services, loan limits and reserve requirements. Requires a secretary of state audit. Specifies that deposits of bank are guaranteed by state and that income bank earns on public funds is not subject to taxation. Specifies that certain bank records are confidential and not subject to disclosure.

H.B. 3452
Creates the Oregon Finance and Credit Board to formulate and implement investment and management policies and practices for state funds controlled and administered by state agencies. Authorizes the board to enter into contracts with state agencies for investment and management of state funds. Authorizes the board to make, purchase, guarantee and hold loans, purchase participation interests and invest and manage state funds. Directs the board to adopt rules. Requires a report to the Legislative Assembly on or before date of convening of 2013 regular session of Legislative Assembly.

Puerto Rico
Rhode Island
South Carolina
South Dakota

H.B. 1320
S.B. 5238
Establishes the Washington Investment Trust.

West Virginia


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