As part of the 2017–19 operating budget, the Legislature required that several studies be conducted. Three were due in Dec. 2017: on data centers, prescription drug price transparency, and the feasibility of a publicly-owned state bank.

Data Centers: The Department of Commerce produced a detailed report on the data center industry in Washington. It writes, “As recently as 2011 Washington was considered the data center hub of the Pacific Northwest, but that is no longer true.” The report finds that there has been a “lack of aggressive promotion of the state’s data center economy and opportunities compared to other states.” Additionally, it cites the lack of certainty with the state’s data center tax incentives, which have been allowed to expire several times. Finally, Oregon is capturing the urban data center business because Washington’s sales and use tax exemptions for data centers are not available in Seattle. (The exemptions are available in Quincy.) The report concludes,

Data centers also create tremendous economic value without putting any significant burden on roads or service infrastructures. There are legitimate concerns about a “rush to the bottom” outcome from tax incentives, but the consensus is that, if one looks beyond just direct employment, the outcome for competitive states appears to be robust.

(For more, here’s our 2013 report on the economic impact of data centers in Central Washington.)

Prescription Drug Price Transparency: The Office of Financial Management was asked whether the state health claims database could be used to make drug prices more transparent. It determined that using the database for that purpose would require new legislation, and it wouldn’t be the ideal reporting entity anyway. The report describes the “challenges in determining true costs and true reimbursements.” It looks at transparency legislation that has been considered or enacted in Oregon, California, Nevada, and Vermont as well as a discussion of drug pricing in Canada. The report summarizes,

Transparency has value. However, transparency in prescription drug prices may face significant legal barriers, many of which are now being litigated in other states. And while transparency may intuitively seem to be an effective mechanism in reducing unnecessary price increases because it has been implemented in only one state, there is little evidence to date to show that such provisions alone drive down or keep down prices.

(See also our 2016 report on Medicaid prescription drug spending.)

Publicly-Owned State Bank: The Infrastructure & Public Depository Task Force came to a consensus in its report that governments in Washington “need access to low cost financing for infrastructure projects.” However, the members did not agree on whether a public bank is a solution to that problem. The report suggests that in the short term, the state could “revitalize the Public Works Trust Program” and “work to increase financing (and safeguard it for the future) for what has been a very successful revolving loan fund program.”

The State Treasurer wrote, “After examining existing studies that other jurisdictions have undertaken about establishing state banks, it is clear why no other state has chosen to establish a state bank in the century since North Dakota did so in 1919.” Additionally, he points out, “You can’t loan money at below market rates and expect to make a substantial profit.” Still, some other members of the task force support establishing a state bank.

Meanwhile, the City of Seattle included $100,000 in its 2018 budget “to conduct a study of the feasibility of establishing a City-owned public bank.” The study is to look at “the actual feasibility of a public bank,” “the possibility/likelihood of participation of surrounding municipalities,” “banking requirements,” “ability to provide community benefit loans,” and “the ability to handle cannabis-related business transactions.”