Local democracy in Vermont remains untainted by modernity. In small towns all over the state, people gather in meeting halls, school cafeterias, community centers and churches to hold the annual town meetings on the first Tuesday of March. Every registered voter is welcome; outsiders are not. Except for the clothes people wear, the comfort of central heating and occasional cable TV cameras, these meetings look and sound much as they did 150 years ago.

It was in this public-spiritedness that over 20 towns considered a resolution at this year’s meeting on March 4 to direct their legislators to create a state bank for Vermont. The vote does not have legally binding effects. It is only advisory. But it offers a important indicator of public sentiment on legislation being considered. The bills pending before both houses of the Vermont state legislature would transfer 10 percent of tax dollars to a publicly held agency, VEDA, the Vermont Economic Development Authority, and would give VEDA a banking license. The proposal would completely transform the way state revenues are used to finance public services.

Right now, the state deposits its revenues in large, private banks such as Toronto-Dominion (TD) Bank and People’s United Bank. Vermont’s smaller, state-chartered banks do not have the capital or collateral to back the state’s $350 million average daily balance. As a result, Vermonters’ money is put to work outside Vermont and in ways they may not support. In TD Bank’s case, money has been invested in the Keystone XL pipeline, a project a lot of Vermonters oppose. At the same time, the state borrows the money used for economic development and infrastructure projects from Wall Street investment banks. If the proposal succeeds, Vermont will join North Dakota as the second state of the union with its own public bank. In 18 other states, including California — where Ellen Brown, president of the Public Banking Institute, is currently a candidate for treasurer — there are proposals for public banks being considered at the state or the city level. Arizona just chartered a commission to study the issue, and Reading, Pa., is in the process of establishing a city public bank.

A small, grass-roots organization I co-founded, Vermonters for a New Economy, sponsored a study by the University of Vermont’s Gund Institute for Ecological Economics and the Political and Economic Research Institute at the University of Massachusetts to determine the economic impact on Vermont of a state bank. The study demonstrated that a public bank that kept Vermont’s tax dollars in the state and used those dollars for economic development and infrastructure would create over 2,500 jobs, more than $190 million in value-added productivity and more than $340 million in gross state product. For a state of 600,000 people with $27 billion in annual GDP, these are substantial economic improvements, amounting to a 1.26 percent boost to growth.