We Could End Every Blue State’s Budget Deficit With One Policy. Even a Five-Year-Old Could Explain It.

Key Takeaways

• North Dakota’s public bank returned $335 M, $430 per resident in 2024.
• Scaled to California, a public bank could yield $16 B annually.
• Public banks can fund infrastructure, education, and climate projects without new taxes.
• Over 20 states have active public‑banking bills in 2025‑26 sessions.
• Private banks earn interest on state deposits, costing billions in fees.

Pulse Analysis

Public banking is gaining traction as a fiscal tool that lets states and municipalities capture the full economic value of their own deposits. The Bank of North Dakota, operating since 1919, demonstrated how a state‑owned institution can generate net income, return dividends to the treasury and provide low‑cost loans for schools, water projects and disaster recovery. By keeping money within the public sector, the bank avoids private‑bank interest spreads and underwriting fees, delivering a per‑capita return that, when scaled, could cover the multi‑billion‑dollar deficits facing California, New York and Washington. This model offers a sustainable revenue stream that can underwrite ambitious policy agendas—from universal pre‑K to climate resilience—without imposing additional tax burdens.

Legislators across the country are already moving the needle. Bills authorizing municipal and state public banks have been introduced in more than twenty jurisdictions, including California’s AB 857, Washington’s SB 5754 and New York’s Public Banking Act. These proposals aim to replicate North Dakota’s success by establishing banks that issue low‑interest loans, retain interest earnings, and support local economic development. Advocates argue that public banks also provide counter‑cyclical financing, as seen during the COVID‑19 pandemic when the North Dakota bank helped secure a high density of PPP loans, cushioning small businesses against shocks. The growing legislative pipeline signals a shift toward institutionalizing public finance alternatives that challenge entrenched Wall Street interests.

The political momentum behind public banking hinges on grassroots mobilization. Organizations like the Existentialist Republic’s Project Freedom are coordinating citizen lobbying, providing one‑sheet briefs and encouraging direct contact with state and city representatives. By framing the issue as a simple “piggy‑bank” analogy, activists make the concept accessible, urging constituents to demand that elected officials bring state‑owned deposits home. If successful, public banks could transform budgetary dynamics, turning billions of dollars of private profit into public investment, and fundamentally reorient the fiscal relationship between governments and the financial sector.