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There is a belief among many Americans that government is inherently wasteful, inefficient, and arrogant. To the dismay of everyone in the Puget Sound area, the recent Sound Transit debacle has confirmed these stereotypes.
Sound Transit is the agency entrusted to build the “Sound Move” transportation system, including a light rail component. Just this fall, we were told the Link light rail project would cost ‘only’ $2.4 billion, and that an audit of the project was unnecessary because, in the words of Sound Transit Chairman Dave Earling, “We have stood more scrutiny than any other agency that I know of in the region, or for that matter, in the country in assembling this plan.”
On December 14, we learned that a bit more scrutiny was definitely in order. A Sound Transit board report revealed that cost estimates have risen to $3.6 billion - a jump of 50 percent. With numbers fluctuating so wildly, this increase is unlikely to be the last.
Although Sound Transit has issued calm assurances that it can pay for its swollen budget, this optimistic forecast is unlikely to materialize.
First, Sound Transit may have trouble collecting the tax revenues upon which it is counting. According to poll numbers released by the agency, 72 percent of residents think work should continue on light rail “as long as the project can be completed without raising new taxes.” Yet in its board report, Sound Transit calls for almost $300 million (adjusted for inflation) in new taxes.
What the agency forgot, or ignored, is that when voters approved sales and excise taxes to pay for the Sound Move plan, it was for a period of 10 years - nothing more. Sound Transit is blithely assuming they can unilaterally extend this period for another three years, regardless of the voters’ will.
Second, the expanded budget depends heavily on new federal subsidies, also known as pork-barrel spending, to fill the financing gap. Sound Transit admits that it “requires high levels of federal funding on an annual basis…” Yet the agency goes on to say that “With many cities around the nation planning and developing light rail systems, competition for [federal funds] is extremely tough…”
Unlike other municipalities, Seattle is poorly positioned to bargain for the limited pool of taxpayer money upon which it is banking. It is unlikely that a Republican House of Representatives will be eager to steer dollars into Democratic districts - districts unrepresented on both the Transportation and Infrastructure Committee and the Appropriations Committee.
The situation is no better in the Senate. Two fairly weak Democratic senators, one a freshman, may find it difficult to pry taxpayer dollars out of a chamber that, despite a 50-50 tie, will still be run by Republicans. Sen. Slade Gorton, who held seats on both the Appropriations and the Commerce, Science and Transportation Committees, might have carried the load, but he’ll be looking for new work when the 107th Congress convenes.
Third, Sound Transit’s proposal for saving money on bond payments is inherently risky. In the board report, the agency writes, “For example, the current financial plan assumes that the agency will issue all its bonds at [sic] 6.0% rate for long-term fixed rate bonds. In fact, the agency will likely want to incorporate a variable-rate bond program (like a variable rate mortgage).”
Essentially, Sound Transit is counting on saving more than $130 million (adjusted for inflation) by gambling on interest rates. As anyone who has a variable rate mortgage knows, sometimes you can save money - but often you don’t. The agency itself confesses that this financing scheme “introduces additional risk.”
Even before the first piece of track has been laid, Link has experienced massive cost overruns and as the December board report shows, the method for financing this hemorrhage is highly unrealistic. What is worse, all this red ink is unlikely to improve congestion. As more and more money has been pumped into mass transit programs nationwide, ridership rates have actually fallen by 10 percent. Sound Transit’s prediction that Link will carry 120,000 people per day by 2010 is no more realistic than its cost estimates.
Light rail is a 19th century technology looking for work in the 21st century. While the trolleys that once roamed the streets of our cities may seem romantic and quaint, they are incapable of meeting modern transportation needs. The Link light rail system should be killed - quickly - before it becomes an even bigger fiasco. Perhaps then we can get on with realistic solutions to our traffic woes.