Quick Rail Boondoggle Update

Rail boondoggles seem to multiply in the US.

• Honolulu rail is not alone at starting at under $5B in 2021, and surpassing $10B in 2020 with no ending in cost escalation, no opening date and continuously revealed construction problems (i.e., hammerhead pillar cracks) and operational problems (i.e., track switching "frogs.")

• Now Austin's rail which started at $5.8B has surpassed $10.3B while mostly incomplete.

• The pseudo high speed California HSR has surpassed $100B and is nowhere near Los Angeles or San Francisco.

Furthermore, "transit agencies nationwide are taking in less farebox revenue, with agencies recovering, on average, just 12.8 cents for every dollar they spent on operations in 2021, down from 32.3 cents in 2019." [Planetizen]

This indicates a much lower utilization and much higher resource consumption and pollution per passenger mile.

Let's build and expand more of these losers, shall we?

Why is My Car Insurance So High

 Quoted in this article on Why is My Car Insurance So High.

What steps can drivers take to get cheaper car insurance?

"Drivers need to do some comparative shopping for insurance rates every couple of years.

If they are considering purchasing another vehicle, they should investigate the insurance ratings and costs of their candidate vehicles and choose wisely; rates for vehicles in the same price range vary because of their varied repair costs, safety features and performance levels.

If the driver has a problematic traffic record, then he or she must consult with their DMV and insurance to go through re-education or other programs in order to lessen their risk score.

Other relevant decisions that affect insurance rates include location and distance driven. Some locations are much riskier than others (drivers who rent may have more flexibility to move to a safer area near by). Long commutes often correspond to higher annual premiums, so work or housing decisions affect vehicle operating costs including insurance."

Uncertainty surrounds $8B Honolulu rail project

National professional news outlet Construction Dive looked into HART in the article Uncertainty surrounds $8B Honolulu rail project after reviewing the Honolulu Civil Beat article What Honolulu Rail Officials Know They Don’t Know.

• The total cost of the project is in question. Panos Prevedouros, chair of the civil and environmental engineering department at the University of Hawaii at Manoa, estimates that it will cost at least $13* billion. The price tag for the mostly elevated rail line could rise as crews move into the city and navigate unmapped utilities, encounter various types of subsoil, come across potential native burial sites, and possibly damage existing structures as they excavate nearby. In order to provide the public with a rapid rail option and stay within the budget, officials could opt to shorten the system

• Polls suggest a majority of the public wants to finish rail and stay within the existing budget. Both can be achieved only by finishing rail at the Middle Street Transit Center, where riders can transfer to coordinated options such as pooled ride-hailing and high-tech versions of Honolulu’s award-winning bus service.

• Prevedouros believes such a plan would give taxpayers substantial value for their money already spent on rail, by getting people beyond both the H-1 and H-2 and the Middle Street merges while avoiding untold billions in construction costs and freeing up any saved construction financing to pay for operations and maintenance.

• Most rail commuters will need to transfer at least once in any event. Consider this example: If rail were built to Ala Moana Center, it would take 12 minutes to get there from Middle Street by rail, and then another 16 minutes by bus to University of Hawaii Manoa — a total of 28 minutes. But if rail terminates at Middle Street, a UH student can get to Manoa by express bus in about 20 minutes.

-------------------------

(*) Back in 2009, FTA's consultant Jacobs of Dallas, TX conducted a risk analysis on HART's budget (actually Honolulu rail became the HART project after 2010) and showed a 10% chance of the project costing $10.5 billion. During the Legislative session of spring 2017, Mayor Caldwell mentioned that for all practical purposes the cost of the project is $10 billion. See "Mayor Kirk Caldwell and City Council Chairman Ron Menor think Oahu taxpayers are so rich we can pay not only for a $10 billion rail system that’s $5 billion over budget and climbing, but also for road projects on the neighbor islands."

As of 2018, the project is at least 6 years late (and likely to have further schedule slippages).

• Taking the Jacobs $10.5 B projection and compounding it by 4% over 6 years gives a year of expenditure (YoE) cost of $13.29 Billion.
• Taking the Mayor's $10.0 B projection and compounding it by 5% over 6 years gives a YoE cost of $13.40 Billion.
• If you dislike compounding inflation and prefer the simple inflation of costs, then the corresponding numbers are $13.02 B and $13.00 B.

Rail Projects: Excerpts from a National Discussion

Last week one of my students asked why rail projects don't get stopped. The following quotes are from recent discussions with national leaders in transportation, regarding the  proposed $2 billion Purple Line for the Washington Metro.  Notice that their quotes are as if they are talking about Honolulu rail... [My comments]

1   One thing that always has to be remembered is that no FTA staffer, or FTA as an institution, is EVER going to take credit for killing a project – and, when it comes down to a GS-12 vs. a Congressperson on a project going forward, who do you think is going to win in the end?" [In Honolulu' s case, Senator Inouye had 40 years of congressional seniority,  i.e., he was unstoppable.]

2  This is what has become of urban transit planning: US Senators playing the role of God in disbursing --or threatening the loss of-- oodles of tax money.  Every FFGA now must come with the Good Housekeeping seal of approval of the state's senior Senator. Alternatives analysis, schmalternatives analysis.*  Its just good old-fashioned pork.  The Senate doesn't work. (* the AA in Seattle for light rail was a sham.) [So was Honolulu's AA that eliminated the PH tunnel with a couple lines of discussion.]

3  It's all about getting elected and staying elected until they die. When they get money for a local goodie, they tell their constituents that its free money just for them.  The other thing they say to the folks back home is that they create jobs but those jobs are mostly for workers from somewhere else. [No comment is necessary.]

4  One thing that you have to understand about building rail lines, most particularly those in urban areas, is that speed is not really a high criterion, particularly compared to the need to keep costs down.  Now, when I say, “keep costs down” in a discussion of urban rail lines, the first reaction of many people is to say, you have got to be kidding, this is not a priority at all – and you cite the $200 million/mile for the Portland Orange MAX line. Urban rail costs have become unbelievably high. When I was working on the Long Beach-Los Angeles light rail Blue Line in the 1980’s, it was coming in at about $877 million (actual cost was over $1 billion, but this wasn’t really known at the time, and it certainly wasn’t publicized) [This is why Honolulu will be "lucky" if the cost per mile stops at $500M, that is, the $4.6 billion Honolulu rail will have an actual cost of $10 billion.]

Accountability of Big Infrastructure Projects

The Incompetence of HART. Cheapest Bid for 9 Stations Comes 75% Over Budget!

Here is good coverage of the situation in the Hawaii Reporter.

Some additional comments:

• The pain in cost overruns and construction congestion will be severe. The only thing we can do now is kick the people responsible for rail out of office.  Six are out already (Mufi, Peter, Linda, Neil, Stanley, Rida*)
• These nine stations are the relatively easy ones to build... A couple of them are in empty fields. Imagine the cost of remaining 12 stations in Kalihi, downtown, Kakaako near the water...
• The next traffic calamity by the elevated rail is the passing of the guideway over the H1/H2 merge.
• After that is the partial loss of Kamehameha Hwy. in Aiea for a year or so.
• After that is the debilitating impacts at and near the airport (Hawaii's tourism economy lifeline.) 

 So far we've been talking about politics, trials, concrete poles, contracts and money. We have not seen much of the rail's traffic congestion. The real suffering should start early in 2015.

Recall that the geniuses at HART purchased miles of steel rails in 2010 and since then they rot unused at Barbers Point Harbor.  These rails won't be put in service for about ten years!

(*) ex mayor Mufi Hannemann, ex mayor Peter Carlisle,  ex governor Linda Lingle, ex governor Neil Abercrombie, ex council member Stanley Chang, ex representative Rida Cabanilla.)

Highway Funding: Do Roads Pay for Themselves? No Because of "Theft"

Here is a brief analysis by Jack Mallinckrodt,  PhD in Electrical Engineering, Stanford University who made U.S. transportation planning his retirement hobby and has developed a series of well thought out articles at his website www.urbantransport.org:

"
The current intense search for additional sources of highway user revenue is grossly misdirected.

Based on FHWA “Highway Statistics” data for 2004 (typical), “highway user fees”, defined as all tax payments by highway users paid as a “necessary condition of their use of the highway system”, are already yielding revenues of $245 billion/yr (2004).  That’s enough to easily pay the full current annual costs of right-of-way, planning, building, maintaining,  and operating, and financing  the entire U.S. highway system, with a surplus (in business called  a “profit”) of $98 billion/yr.

 The fact that they don’t do so is due entirely to:

1. An arbitrary (not rational) redefinition of “Highway User Fees” hs that counts only about half of the ACTUAL highway user fees paid, and
2. State and federal politicized congressional misappropriation of those  surplus revenues, (“Diversions) to earmarked political favorites (street cars, bullet trains etc.) that provide little or no congestion reduction capacity at 90 or more times the net the cost per passenger-mile.

As someone might have said: “We don’t have a revenue problem, we have a revenue distribution problem.”. The revenue distribution process is a leaky sieve. The revered “Highway Trust Fund” initiated long ago as a solution to highway funding, with its latter day revisions has become instead, part of the problem.

No conceivable additional revenue collection mechanism, not increased fuel taxes, not tolling, nor mileage charge system, will resolve this funding gap until we fix the real highway fund leakage problem.  Our first priority must be to fix the highway user fee receipt distribution process. Otherwise we will simply be spinning our wheels faster. There is much more to this story, derived and explained in “Highway User Fee Surplus.”
"

U.S. Infrastructure Projects Cost Way More Than They Should, Explained

The Atlantic Cities magazine published a condensed analysis of seven main reasons that explain why U.S infrastructure project cost more than elsewhere. They are:

 1. Davis-Bacon Laws: Passed in 1931, the Davis-Bacon Act mandates that laborers for federal public works projects receive local prevailing wages. (+22%)

2. Project Labor Agreements: In 2009, President Obama signed an executive order mandating that contractors for federal projects exceeding $25 million sign Project Labor Agreements, which guarantee the hiring of union workers. (+13~15%)

3. 'Buy America' Provision: For decades, this provision has discouraged projects from being built with manufactured goods made outside the U.S. Obama strengthened it in the 2009 stimulus package to include projects besides just highways. (+10~500%)*

4. Lengthy Environmental Reviews. (+10~25%)*

5. Transportation Alternatives Program: Everyone can agree that walking trails, complete streets, historic renovations, landscaping, and bike lanes are public goods, but should they be paid for with highway fund money? This is the current policy of the FHWA. (+5~20%)*

6. Administrative Costs: Currently, U.S. transportation revenue is like a boomerang, going from the states to Washington and back. Naturally, this process adds bureaucratic costs. (+10%)*

7. Toll Bans: Although tolls exist along some stretches of interstate, they are generally not permitted by the federal government. This has stripped the government of a key revenue source that could be used for repairs, and for cheaper borrowing. (+10~50%)*

Note: (*) Author's estimates.
SOURCE: 7 Reasons U.S. Infrastructure Projects Cost Way More Than They Should

Ten Plus One Reasons Why I Do Not Support The Honolulu Rail Project

1. Among all travel options on Oahu, mass transit serves 6% of the travelers, just slightly above the U.S average of 5%. Focusing on this small piece of the pie is no way to solve the mobility problem of the 80% that drive and carpool, i.e., rail is the 1% solution because City's rosy numbers show that transit share will grow from 6% now to 7% with rail.
2. Spending over five billion dollars for a non-solution is clearly unethical and all responsible for it are breaching their professional and fiduciary duty. As an engineering professional and past candidate for mayor I want no part in this unethical endeavor.
3. The original system was supposed to be 34 miles through Kapolei to UH and Waikiki for about $3 Billion as shown in the headline above.  The current project starts a mile out of Kapolei and dead-ends at Ala Moana shopping center with no service to Waikiki or UH. Just 20 miles for over $5 Billion. If offering the public 41% less for a 73% higher price is not a lie then what is it?
4. In some respects Oahu's congestion is comparable to that of the largest cities in the nation chiefly because Oahu is lane deficient.  20 miles of rail and 20 overhead stations will cause critical lane closures and result in debilitating congestion for a decade or more. For example, look at the image below and consider what traffic in downtown Honolulu will be like with Ala Moana Boulevard closed for about a year? The impact on quality of life, economy and tourism will be huge.
5. B, C, E, 3, 9, 11, 20, 43, 53, 73, 81, 90, 91, 92, 93, 94, 96, 97, 98A, 101, 102, 103, 201, 202 are all the bus routes that will be eliminated or terminated to the nearest rail station. TheBus will be changed from a core operation to a feeder operation. This will add a lot of inconvenience and disappointment to the people that need transit service the most.
6. Rail is high security risk. Mentally ill shooters and terrorists typically attack work, school and train station locations. Third rail systems like Honolulu's are a magnet for suicides. Train stations are a hot spot for robberies and drug trafficking.
7. Rail makes Honolulu less resilient:It is practically certain that a major storm will hit Oahu in the next 50 years. Ten miles of reversible lanes not only will reduce congestion by over 30% for one third the cost of rail, but also they will be a critical backbone for post-storm recovery. Instead rail will be incapacitated for a prolonged period and critical resources will wasted to revive it.
8. Cannot afford it. Hawaii is among the five worse states in the country in pension and health benefit funding liability. Future budgets will be very tight for the state. Outer islands should worry about their loss of big subsidies they receive from Oahu (i.e., they too will pay for it.)
9. The City already has big problems finding a few million dollars for important services. Its budgets will be crushed by the union raises, the EPA sewer consent decree and the pension liabilities. Then add the rail construction cost-overruns and bankruptcy may not be far off.
10. Out of more than 650,000 adults on Oahu only 156,000 voted YES to rail in the 2008 elections. That yielded a marginal 50.6% approval among those who bothered to vote. During elections the ratio of pro-rail lies to anti-rail information in advertising media was more than 10 to 1. Taxpayer monies were used to support rail and, indirectly, rail-supporting politicians. Calling this a "mandate" is disingenuous and the process was indeed unethical.

Last but not least, the aesthetics of the system are undesirable for the small, tropical capital of Honolulu. Here is just one before/after picture offered in city's renderings.

Fixing the Basics on Rail for Hawaii's Pro-rail Politicians

Full article in Hawaii Reporter. It closes as follows:

If Hawaii's pro-rail politicians are really interested in improving transit in the county of Honolulu, they may begin their education on the history of elevated rail in sunshine cities by simply reading about Miami's Metrorail, and San Juan’s Tren Urbano. Here are a few highlights for Metrorail and Tren Urbano.

Miami’s Elevated Heavy Rail: They got 80% Federal funds but still they run out of money due to cost overruns. (Honolulu gets only 30%).  Ridership forecast was about 200,000 riders (Honolulu's is about 120,000 riders).  When the first segment of the single line opened ridership was only 10,000.  In 1990, six years after opening, it reached only 25% of its forecast ridership or about 50,000! They too ordered trains from Ansaldo and there were allegations of conflicts in the procurement.

San Juan, Elevated Heavy Rail: They got 50% Federal funds but still there was a 74% escalation of construction costs (+74% over budget!)  There was a huge escalation of combined bus and rail operation and maintenance cost after the line was opened. Combined costs shot up by +250%!  There was a downgrade of Puerto Rico’s bond ratings and new taxes were enacted to pay the debt. There was a dramatic decline of total transit ridership (bus and rail) because the train dismantled their bus. It is now more than six years since its opening in 2006 and the train has not reached 50% of its opening year forecast ridership!

Bottom line is that trains are like wind mills. Their theoretical capacity is high and the promises for power and ridership are full of hype.  Once installed reality kicks in and they prove to be only ~25% productive...

Honolulu Rail Cost Escalation

It is important to understand how much costs escalate in megaprojects. All these costs in bond-financed public projects are to be borne by the taxpayer. Oahu has fewer than 400,000 taxpayers so the possibility of a twelve billion dollar bill for a long rail line presents a staggering liability. Over $30,000 per taxpayer.

In 2005 Mayor Mufi Hanneman and his supporters went to the Legislature and asked for a temporary (20 year) 1% tack on to Hawaii's 4% general excise tax in order to develop a large rail system for an approximate cost of $2.7 Billion. The Legislature approved a 0.5% tack on to the GET in hopes that Federal Transit Administration and other taxes will cover the total. Here is the letter to The Honolulu Advertiser by Mayor Mufi Hannemann promising that the 20 mile system will cost $3 Billion.

In 2008 General Elections there was a City Charter Amendment asking the city to install a steel on steel fixed guideway system. The cost of the 20 mile system had grown to $4.6 billion and almost $1 Billion was the contingency funds. TheBus funds were not touched in 2008.

In 2010 outgoing governor Lingle procured a financial analysis report for the rail that she had supported, in light of the escalating costs of rail and the 2008-2009 fiscal crisis. IDG, a reputable financial and risk analysis consultant based in Washington, D.C., estimated that the 20 mile cost will be more likely $7.2 Billion.

Despite these facts, Governor Abercrombie signed off on the State EIS and Mayor Carlisle dismissed the financial report as "an anti-rail tirade."

In summer 2012 the City submitted its final application to the FTA for a Full Funding Agreement. In it, the cost of the 20 mile line has grown further to $5.17 Billion but contingencies have been reduced to about $600 Million and another $150 Million is "borrowed" from TheBus fleet funds. In other words, the 2012 cost estimate would be $5.7 Billion if they did not fudge the amounts and kept them at the 2008 level.

In May 2012 Councilmember Kobayashi asked HART to estimate the cost of the full 34 mile system from West Kapolei to the UH and Waikiki. HART's response was $9.03 Billion.

If we apply IDG's cost escalation of the 20 mile system to the 34 mile system we get $12.6 Billion. Hanneman's rail has ballooned from $3.6 Billion to $12.6 Billion!


Rail was a bad idea at a cost of $3 Billion. Now that the likely cost is three times higher, the choice is clear. People have made their choice quite clear by handing both mayors Hannemann and Carlisle their walking papers.

US Debt: Remove 8 Zeros. Get an Understanding.

I could not resist copying here this simple chain email message.

• U.S. Tax revenue: $2,170,000,000,000
• Fed budget: $3,820,000,000,000
• New debt: $1,650,000,000,000
• National debt: $14,271,000,000,000
• Recent budget cuts: $38,500,000,000

Let's now remove 8 zeros and pretend it's a household budget:

• Annual family income: $21,700
• Money the family spent: $38,200
• New debt on the credit card: $16,500
• Outstanding balance on the credit card: $142,710
• Total budget cuts: $385

And I add this...

Revised family plan: Raise the credit card limit to $160,000

Obviously the parents are nuts. Pity the children.

Demographia's W. Cox on Honolulu Infrastructure

Wendell Cox of St. Louis based Demographia.com made an interesting presentation at the 36th annual Business and Investment Conference organized by Smart Business Hawaii at the Ala Moana Hotel on January 11. Link to Cox's 1/11/12 slideshow.

Some of his important findings and suggestions include:

• Honolulu lost 50,000 residents between 2000 and 2009 in terms of domestic migration. Its taxes, jobs, congestion, housing prices, etc. have caused a loss of domestic residents to other Hawaii counties or other states.
• Hawaii was 8th highest in taxation in 2009 in the U.S.
• Honolulu housing affordability was the worst in the U.S., about three times worse that the US average!
• From the U.S., only Los Angeles and Honolulu are included in the 25 most congested cities in the world.
• Several other cities in the US have gone bankrupt and Honolulu is racing to bankruptcy with multi-billion dollar liabilities (pensions, sewers, rail, etc.)
• Politicians are ignorant of the fast approaching demographic time bomb of Baby Boomers who are switching from taxable paychecks to pensions and healthcare.
• Honolulu rail ridership projections are "rosy."
• Cautions about the rail's budget "You Won’t Know the Bill Until It’s Too Late"

Uncertain Funding and Injuctions Are Guaranteed

Meanwhile Senator Inouye expressed doubts to Civil Beat.

At best by 2016 when the senator's term expires rail will be about a quarter done assuming that all efforts to stop it fail. He will be 92 years old.

I doubt that the good senator will be able to provide more than $100 Million per year between now and 2016. This would cover less than 10% of the project's cost. I am surprised that he is copying so much from President Obama who he did not support in 2008. Senator Inouye's audacity of expecting over $1,800 Million of federal support for Honolulu Rail and hope that he will be a senator past age 100 to see them through is quite surprising.

At $100 Million per year starting in 2012 it will take until 2030 for Honolulu to receive a total of $1,800 year-of-expenditure federal funds. At that time Senator Inouye will be 106.

Mortgage Deduction On the Chopping Block - Big Deal?

The headline reads as follows: Proposal to Limit or Eliminate Tax Deduction for Homes Is Unpopular, Could Raise Billions

There is no doubt that this headline is true on both counts: Unpopular and a Tax Loss for the government. On the opposite side, the mortgage interest tax deduction is Popular with homeowners but is it a big deal?

I set out to answer this for myself in detail using my records. I file separately as head of household with one dependent and I carry a large mortgage in its second year (in 2010), so the effect of a mortgage deduction elimination would be "as big as it gets" in my case.

In the process of estimating all taxes I paid in 2010 I discovered so many hidden charges such as tire disposal fees, and chemical and pollution fees. I do not travel a lot but taxes on hotels, car rentals and airlines are so heavy that they show up clearly.

Also, 2010 was an election year and I run a campaign. My dry clean bill was substantial and I discovered that the actual tax was 10.3% because of the chemical and pollution fees that government has added to the cleaners. The 10.3% includes Honolulu/Hawaii 4.67% general excise tax (GET). So a visit to the cleaners cleans both clothes and wallet!

Utility bills and car fees are vehicles for tax collection and the two of them combined are just as bad as Hawaii's GET which I went at length to calculate from a pile of receipts and statements.

Long story short, my aggregated breakdown of taxes in percentages is shown below, for the actual case with my mortgage and for an estimated case where my $36,000 deduction in mortgage interest was taken away.

It is quite clear that given my total income A, with mortgage deduction in 2101 I paid 0.311A in taxes. If I could no longer deduct mortgage interest then my total tax would have been 0.375A. The difference between the two is substantial and is roughly equal to my 3-year-old's annual day care cost. That's a big deal!

The bottom line is that being in Hawaii without a mortgage interest tax reduction would make me feel quite European. (EU is infamous about its high taxes due to the extensive socialist policies.) Nearly 40% of my middle class income would be lost to taxation.

While the elimination of this deduction may have a small impact in low cost residential markets, it's effects at regions with median housing prices over $300,000 would be significant to the housing and real estate markets, to the taxpayers of those areas and by extension to the general economies of those regions. It would be devastating for the handful of regions with median housing prices over $500,000, and Honolulu is one of them.

Honolulu's Special Interests Enrichment

The price tag for preparation of the Honolulu rapid transit project’s environmental impact statement was originally $86 million but has since bulged to $156 million, a City spokesman confirmed today. The current value is $156,211,000 and it is due to expire July 11 of this year. Read full article in Hawaii Reporter.

This does not include the cost of the Alternatives Analysis which was in the order of $20 Million.

Recall that in 2007 Tampa opened 10 miles of elevated reversible toll lanes ($1.50 toll per trip). Planning, design, and construction were completed in seven years for a total cost of $320 Million. In comparison, the Honolulu Rail Gang will spend $320 Million for planning, design, lobbying and PR, and 90% of it comes from local taxes.

Pension Congestion? Life is a Freeway. Lift the Limit from 65 to 70.

In 1940, an American enjoyed 12 years of life upon retirement, on the average. In 2007, an American is expected to enjoy over 17.5 years upon retirement. This long retirement period of 17.5 years is both the good news and the bad news.

The good news is of course that we all wish to live long lives and the outlook is good. The bad news is that retirement systems worldwide cannot support so many retirees living for so long.

This is one area where indeed Hawaii is not alone, but its government employee retirement system is among the five most troublesome in the U.S. George Berish, an expert in the field, has explained this in a series of articles in the Civil Beat.

The critical measure for the future health of a state's or country's overall retirement system health is the Support Ratio. This is the number that shows how many working people support one retiree.

In 1970 the U.S. had 5.3 workers supporting one retiree. In 2010 the number of workers per retiree dropped to 4.6. This is alarming enough but it gets much worse. In 2050 the estimation is that there will be only 2.6 workers per retiree, so over 25% of their earnings will have to go to the retirement fund to support retirees. At that point overall taxation will surpass 60%, and in theory it is best to move to another country.

Not so fast!

Read my full article in HAWAII REPORTER.

The Bills are in the Billions

Hawaii.StateBudgetWatch.org has issued a report on the financial state of the state which may be summarized as follows.

+$19,555,468,000 Assets
-$13,244,809,000 Capital Assets (we can't sell roads and bridges to pay bills)
- $2,381,139,000 Restricted Assets (law does not allow the sale of these assets)
+$3,929,520,000 Available Assets to Pay Bills

-$10,218,595,000 Reported Liabilities (these appear in the biennial budgets)
-$11,903,857,000 Unreported Retirement Liabilities (these are hidden in the biennial budgets but very much real liabilities: pension funds and coverages for state employees)**

+$18,192,932,000 Money Needed to Pay Liabilities

$39,600 Each Taxpayer’s Financial Burden

The report does not include city's projected liabilities which easily top
+$11,000,000,000 for Rail and Sewers alone

Each Oahu taxpayer's liability today is well over $60,000.

Here is a comparison of how bad this is: Greece is near bankruptcy. Greece's debt is about $440 Billion (over 300 Billion euro) and there are about 11 million Greeks. So the current liability for each Greek is about $40,000.

To cope with the repayment of the debt, sales taxes in Greece exploded to 23% and added gasoline tax increased price from $5 per gallon in early 2010 to $8 per gallon in mid-2010.

Meanwhile in Hawaii a thoroughly rotted political structure supported by myopic large businesses and entertainment-focused media is piling on bad projects, bad laws, bad decisions and colossal debt.

** Update (1/28/11): Hawaii makes national news by having the highest debt. "Hawaii's debt, for instance, is $5.2 billion. But so is its pension obligation. Combined, the dual obligations make up 16.2% of the state's economy, according to a report released Thursday by Moody's Investors Service. That's the nation's highest total liability as a share of the state's gross domestic product." This seriously jeopardizes Hawaii's to issue bonds at favorable rates.

Decrepid Infrastructure Must Be Number One Priority

It seems that this message is loud and clear. People get it, Congress seem to get it and President Obama has started speaking more strongly about maintenance. But words must turn into acts.

America's capital investment deficit is a great recent article from the Washington Post. I quote this:

"The two deficits are more alike than people realize. Larry Summers, the outgoing director of the National Economics Council, explains it well: You run a deficit both when you borrow money and when you defer maintenance that needs to be done. Either way, you're imposing a cost on future generations. A dollar in delayed road repairs and a dollar in borrowed money are not, in other words, that different: Both mean someone is going to have to spend a dollar later. In 2011, America should stop passing that buck."

Meanwhile, Honolulu has terrible roads, poor facilities at parks and beaches, it operates under an EPA consent decree, it has over 365 water main breaks per year, and has a current deficit of about $100 million.

Unfortunately it also has a mayor who turns his back at the avalanche of existing liabilities and focuses on starting a rail boondoggle that under best scenario estimates will cost us $300 million per year for 30 years, on top of everything else.

Two Financial Risk Analysis Clearly Show Honolulu Rail Project is Unaffordable

First was the 2009 Jacob's risk analysis report commissioned by the FTA. It said this:

At the present stage of pre-Preliminary Engineering, one can be 90% confident that the proposed project will cost between 5.2 and 10.2 billion dollars (Figure 1-1, page 1-10 of Jacobs report.) Once PE is done and the project enters Final Design, then its price tag is expected to narrow: The project will have a 90% chance of being built for a budget ranging between 4.8 and 8.1 billion dollars.

Read more here: http://fixoahu.blogspot.com/2009/07/jacobs-report-for-honolulus-proposed.html

In December 2010 Gov. Linda Lingle released state-funded study on the costs of rail. The Star Advertiser summarized it as follows:

The proposed 20-mile rail transit system is likely to cost the city an additional $1.7 billion over the next 20 years, raising the total price tag to at least $7 billion, according to a state review of the project's finances. And there is "substantial risk" that the $1.7 billion additional cost could grow to $4.5 billion.

Read more here: http://www.staradvertiser.com/news/20101203_Cost_will_balloon_rail_report_finds.html

My take quoted in the Star Advertiser is this:

Prevedouros said the analysis was consistent with the 2009 Federal Transit Authority report prepared by the Dallas consulting firm Jacobs Engineering Group, which placed the estimated cost of Oahu's 20-mile system at $5.29 billion but also indicated that there was a chance that the cost could reach or exceed $8.1 billion.

"(Jacobs) did not have a stake in the game. They were just reporting a number," Prevedouros said. "They're experts in getting it right, and they said there was a high chance of overruns. I would trust them more than I would trust advocates of the project."

Prevedouros said the results of the latest analysis should give lawmakers pause as they consider whether and how rail should proceed. "It's a different Congress. This will give them pause. It's a perilous path heading forward."

Read more here: http://www.staradvertiser.com/news/20101203_Train_opponents_cheer_prediction_of_cost_overruns.html

It is important to mention the impeccable reputation and expert subject knowledge of the primary authors of the report prepared by Infrastructure Management Group, Inc. Steve Steckler is Harvard University planner and chairman of IMG with past service in the U.S. DOT. Thomas Rubin is a mass transit consultant who's served as Controller-Treasurer of the Southern California Rapid Transit District, now known as Los Angeles Metropolitan Transit Authority.