Concerned that small businesses and family farmers can't get access to loans they need to keep or expand, activists in Oregon wanted to create a state-owned bank that would manage the money in state bank accounts and invest it in local businesses.
They made their case to lawmakers Wednesday in separate House and Senate committees, but the idea has been considerably scaled back. The concept has morphed into a proposal to create a new agency that would try to coordinate all of the state's millions of dollars of investments in small businesses and farms.
The idea, proponents say, is to give businesses one place to go if they're looking for state-financed loans or investments.
"When small businesses and family farms are ready to grow, we need to be ready too," said Rep. Phil Barnhart, D-Eugene, a supporter of HB 3452.
State Treasurer Ted Wheeler described the board as a repository of resources for business owners.
Farmers and small business owners told lawmakers that they've had trouble getting approved for loans from banks that have tightened their grip on money during the economic downturn.
Proponents said the idea is a first step that they hope could eventually expand into a more powerful investment agency for state money.
"We hope it will provide the experience necessary to show the Legislature and the people of this state what more might be possible," said Barbara Dudley, co-chair of the Oregon Working Families Party who told lawmakers she'd like to see them create a state bank.
The bills would not loosen state investment standards for pension funds or other state savings account to allow for an imprudent investment in an Oregon-based company.
Opponents questioned whether the concept would actually help small businesses, saying the state Business Development Department is a great resource for coordinating state investments, and it already exists.
Ann Marie Mehlum, chair of the Oregon Bankers Association and chief executive of Summit Bank in Eugene, said there's plenty of money available for small businesses that are qualified for loans.
"We're not hoarding it," she said of her bank's money. "We want to make loans. What we don't want to do is make the loan that throws the customer into bankruptcy."
The Senate's version of the idea, SB 889, is more expansive. It would allow the board to directly lend to businesses or to supplement loans by community banks.
Oregon has well over $200 million available for loans, grants or other support for small businesses. It's administered through programs in many state agencies, including the Business Development Department, the state treasury and the Department of Energy.