HUDSON: ACCESS TO CAPITAL IS STILL THE RALLYING CALL
Instead of ‘smart growth,’ how about some discussion of ‘smart governance’?
We are now halfway through the 2011 Legislative session and the budgetary Sword of Damocles continues to float ominously over the witnesses providing testimony to the Joint Budget Committee.
Whose heads will be removed, precisely when the budget-balancing blade will be swung and what the consequences of the ensuing fiscal carnage will be are questions without answers (for the moment). One thing we can predict is the decibel level of the caterwauling that will batter our ears once the bleeding begins. To paraphrase the observation of Russell Long on taxes, “Don’t balance my budget and don’t balance your budget, balance the budget of that S.O.B. behind the tree!”
Whether you are sympathetic with the Republican argument that Colorado has a spending addiction requiring a legislative visit to rehab, or the Democratic claim that our government suffers from a revenue deficit demanding a return to the higher tax rates levied in more prosperous times, virtually everyone acknowledges that our economy is in desperate need of recovery. It doesn’t help that for every job lost during the recession three new immigrants have arrived in Colorado to join local residents in unemployment queues. There is a reason why the candidates for Mayor of Denver are chanting a “Jobs, jobs, jobs” mantra in unison. But, if you listen more closely, you will hear that the single largest obstacle to economic recovery has and continues to be “access to capital” for local businesses and entrepreneurs.
Why a relatively wealthy state can’t seem to assemble significant investment pools is a lesson in unintended consequences that reaches back more than three decades. During the summer of 1980 I was invited to sit on a panel at a Club 20 meeting in Grand Junction. Although I was a Denver legislator, I served on the House Transportation and Energy Committee, and powerful Western slope interests were fighting to have I-70 widened through Glenwood Canyon, while oil shale development appeared likely to explode with unknown impacts. (Until recently I still had a T-shirt given me by the Western Colorado Congress that said, “Colorado Oil Shale: Buried Threat or Buried Treasure?” I’d been invited more to be lobbied than to actually inform.)
I flipped on the motel television once I arrived and jumped in the shower. When I stepped out, towel in hand, I heard the twang of bluegrass banjos playing. Curious, I walked into my bedroom to see a magnificent picture of a burbling Colorado mountain stream set against a frame of majestic peaks. This was the Rocky Mountain High that John Denver sang about. The music abruptly stopped and the television screen cut to a skyline shot of Denver obscured by the ugly orange smog affectionately known as the “brown cloud.” With stentorian authority that reverberated like the voice of a deity, the announcer declared, “First they stole our water, now they want to steal our money! Vote NO on branch banking.”
I was blown away. Whatever support there may have been for the convenience of branch banking along the Front Range, dripping wet I knew the vote would run eight or nine to one against this ballot proposal in rural Colorado. And, so it did. The worry, of course, was that large, greedy Denver banks would snap up independent banks in farming and ranching communities across the state thereby denying local customers ready access to capital. Such acquisitions probably would have occurred if voters had approved branch banking. What impact this would have had on loan practices will never be known and can only be debated. Colorado successfully resisted branch banking until the federal government ordered it nationwide. Then, there were no banks in Denver large enough or powerful enough to resist being gobbled up by banking giants in places like Minneapolis, Charlotte and New York City.
Today, it isn’t just businesses in communities like Swink, Alamosa, Craig or Cortez that have difficulty finding lenders; it’s the entire state of Colorado. Once the “too big to fail” banks were told to pull in their sub-prime horns, Denver might just as well have been Tajikistan. We have the same imperial relationship with Wall Street that the American colonists had with the Royal Bank of England. When Wall Street catches a cold, Colorado finds itself bedridden with pneumonia. Solving that problem will require more than budget cuts or tax hikes.
There is no reason that the Colorado Legislature couldn’t move aggressively to make Denver the regional banking center for the entire Rocky Mountain West. After all, there’s a reason why 80 percent of American companies incorporate in Delaware. Instead of “smart growth,” it would be nice to hear some discussion of “smart governance.” Who is willing to start that conversation?
After serving in the U. S. Navy, Miller Hudson moved to Denver in 1972 to work for Mountain Bell. He has lived here since. In 1978, he represented northwest Denver in the state Legislature, serving two terms on the Transportation and Energy Committee. Taking an early retirement from USWEST he formed a government affairs consulting practice. He has been a contributor to The Statesman since his days at the Capitol.