Budget funds key first step in State Treasurer’s wealth gap initiative
OLYMPIA – With the Governor’s signature on the supplemental budget today, Washington state took a key first step in creating the Washington Future Fund, an initiative championed by State Treasurer Mike Pellicciotti to address the wealth gap in Washington. Today’s budget forms the Washington Future Fund committee, a study of wealth inequality, and a final analysis of all legal and economic issues related to proposed 2023 Washington Future Fund legislation.
“Tackling deep systemic issues, like the generational wealth gap, takes creative solutions with a long-term strategy,” said Treasurer Pellicciotti. “I appreciate the support from the Governor and legislature today to advance our financial plan. Disrupting cycles of poverty by investing in our children’s futures is a win for all Washingtonians.”
The Washington Future Fund, based on the “baby bonds” model conceived by economist Darrick Hamilton, would invest $3,200 for every child born under Apple Health (Washington State’s version of Medicaid). The plan, if legislatively created and funded in 2023, would provide economic opportunity for about 40,000 children a year throughout Washington. Almost half the babies born in Washington each year are Apple Health births, and in some rural counties it is closer to 75% of the births.
“The Washington Future Fund will be an investment not only in our kids but also in those communities facing persistent poverty and a lack of access to capital,” Pellicciotti continued. “We need to ensure that those kids growing up in rural and urban communities who choose to, can stay in those communities, buy homes, start small businesses, and thrive where they grew up. We can give hope and a real opportunity for kids to achieve their dreams regardless of how rich their parents were.”
Under the plan, an eligible newborn would access their share of the Washington Future Fund upon adulthood, through their 31st birthday, and would direct those funds to be used for: (1) education (broadly defined and including trades and apprenticeships), (2) home ownership, or (3) starting a small business. The recipient would still have to be a Washington resident and use the funds in the state. The Washington Future Fund would be funded by setting aside existing state dollars today and then having the State Investment Board invest that reserved money over the next two decades to grow those funds, like how state employee pensions are invested.
Today’s budget calls for final Washington Future Fund legislation to be ready for next year’s legislative session. The proposal for the Washington Future Fund was introduced this year by Sen. Yasmin Trudeau (D-Tacoma) and Rep. Monica Stonier (D-Vancouver). Today Treasurer Pellicciotti thanked them, their bi-partisan co-sponsors, and Governor Inslee for their successful leadership in moving the initiative forward.
“I’ve been so proud to work with Treasurer Pellicciotti on the Washington Future Fund to build a pathway to a stronger, healthier economy for all of us,” said Sen. Trudeau, the Senate sponsor of the legislation. “The Washington Future Fund budget proviso is about equipping our communities and our state with the information we need to address the problems of wealth inequity and generational poverty. It has been an honor to work with neighbors across the state to lay the groundwork for a future where everyone has the financial tools they need to live the lives they choose for themselves.” said Sen. Trudeau.
“Breaking the cycle of poverty is something legislators and advocates talk about all the time. Rarely do we have an opportunity like this to uncover a path. Thankfully we can get started on this work and continue to build a bipartisan and compassionate state policy to do just that, to redirect the trajectory of life for Washingtonians experiencing generational poverty,” said Rep. Stonier.