Taxes Poison Growth. Hawaii Politicians Love Taxes. Stagnation!

In the text below, I copy the analysis done by the Illinois Policy Institute titled Do Higher Taxes Chase Away People, Wealth, and Jobs?

I changed one word: Illinois to Hawaii. It all makes perfect sense for Hawaii. With one difference: Illinois charges moderate-to-high taxes. Hawaii charges very high taxes. So the call to reduce taxation is much more urgent for Hawaii than it is for Illinois.

Nationwide data from the last ten years show states that limit their tax burdens economically outperform those that don’t. High taxation drives people, wealth, and jobs out. Lawmakers should emulate the low-tax, business-friendly policies of high-growth states.

The table below makes it clear: Nationwide data indicate that high tax burdens hurt economic growth. From 1998 to 2008, the ten lowest-taxed states economically outperformed the ten highest-taxed states on many key measures.


The lowest-taxed states (2008 state and local taxes as a percentage of personal income) include Oklahoma, Texas, South Carolina, Colorado, Missouri, Oregon, Alabama, Tennessee, New Hampshire, and South Dakota.

The highest-taxed states include Alaska, New York, Wyoming, North Dakota, Hawaii, Maine, Vermont, New Jersey, New Mexico, and Connecticut.

The economic "winners circle" is clear. Hawaii is nowhere near it. Government spending reduction and tax reduction are necessary. The alternative is what we've got: Prolonged economic stagnation and prayer that the tourists will come. And for those who did not get to the bottom of it yet, the proposed rail is permanent heavy taxation, the results of which are described in the table above.

Chronology of Mufi's Rail (Update 1)

Here is the rail update at the conclusion of 2010.

2004: Rail will cost $2.7 Billion and 1% GET charge is needed.

2005: OK fine, 0.5% tax will do it – we’ll get $450 Million from the FTA.

2006: Rats! The Alternatives Analysis had to spoil it. Rail will cost $4.6 Billion.

2006: Rats! Cliff Slater noticed that the 2000 Bus Rapid Transit also planned by Parsons Brinkerhoff for the Harris administration had higher projected ridership than rail. So... with rail we pay 3 times more to get less.

2006: City will have Feds give it as much as Los Angeles and New York City: $750 Million.

2007: This state is run as a banana republic. As such, it starts collecting people's taxes to build a system that has no environmental approvals.

2007: Smoke and mirror events begin in earnest paid by taxpayers. Neither Leeward Community College nor UH-Manoa get any stations.

2008: Hannemann gives a helicopter ride to Oberstar who then says that Feds will give $900 Million. Hannemann declares that “the train has left the station.”

2008: Senator Inouye says that if we lose the EPA lawsuit for sewage treatment the $1.2 Billion bill “will break the back of the city.”

2008: Council support is shaky. Back room deal-making results in a route via Salt Lake.

2008: DEIS comes just two (2) days before the General Election and referendum or rail promising a ridership of 97,000 in the opening year! (No modern light rail in the US, even in cities 5 times bigger than Honolulu, carries more than 38,000.)

There is no time to review the DEIS but Inouye advises that people only need to read the summary. Fed share is now claimed to be $1.2 Billion.

2008: Public is deluged with city, union and Hannemann campaign “Light Rail” commercials, emails and letters, and a 50.6% “victory” is obtained.

2008: More political maneuvering and the route goes back via the airport. Warnings that it violates Federal Aviation Administration rules are ignored.

2009: Construction will start at the end of the year. (Isn’t it still 2009?)

2009: Rail is insolvent – Inouye joins the rail party. Feds are now claimed to pay $1.55 Billion.

2009: We lost the EPA lawsuit and appeal. We are now $1.2 Billion in the hole. But ignorance is bliss.

2009: Desperate for good news. Hannemann: “Rail creates 10,000 jobs!”

2009: UH Economic Research Unit: Rail might create up to 2,000 jobs in its peak year. (Given that all rail technology and materials need to be imported, I estimate that Local Jobs will be no more than 1,000 per year.)

2009: In November Hannemann declares that he is willing to wait a month or two to iron out some details; 6 months later his iron is not working.

2010: City steals $300 Million from future TheBus capital investment to balance TheRail budget.

2010: Four years after the Alternatives Analysis and three years after the start of tax collection this proposal has no environmental clearance, no cultural resources clearance and no robust budget.

2010 (May): FTA Administrator Peter Rogoff makes a strong anti-rail, pro-Bus Rapid Transit speech before the Boston Federal Reserve.

• "... last year we conducted a study at the request of a number of legislators that asked us to look specifically at conditions of our largest rail operators. That report takes on particular significance in our department since one of the legislators that requested that report was the then-Junior Senator from Illinois, Barack Obama. The report revealed a backlog of deferred maintenance at our seven largest rail operators of no less than $50 billion dollars."
• "...the majority of transit trips taken in America are still done by bus. In fact, Americans take 21% more bus trips than rail trips. But when it comes to replacement, the costs associated with replacing rail eats up three quarters of the $78 Billion backlog."
  

2010: The cost is up to $5.4 Billion not counting the expensive Airport Runway avoidance. Hannemann really needs to get off this train.

2010: Hannemann did get off the train and run for governor, and lost in the primary. At the same time the author came third in the race for mayor to replace Hannemann. City prosecutor Peter Carlisle won the 3-way race with 39% of the vote. He immediately went to meet with the FTA to declare his commitment to the rail project.

2010: Outgoing Governor Linda Lingle releases an independent financial analysis of the project by IMG. It concludes that (1) construction cost will likely be $1.7 Billion more than the city's advocacy estimate of $5.4 Billion; and (2) based on a 30 year outlook, the total annual project cost will be $310 million per year (best case) and nearly $500 million per year (worst case.) For comparison, the FY 2005 entire CIP budget for Honolulu was $300 million*.

2010: Carlisle is "not worried" about the report and he dismisses it. However, the pro-rail Star Advertiser urges caution for the first time since 2004: "The release last week of a financial analysis commissioned by Linda Lingle during the waning months of her administration added another fear factor to the already scary $5.5 billion price tag for the 20-mile elevated rail project."




(*) Note I use FY 2005 because that was a clean and normal year for Honolulu with no special assessment for sewers and budgeting for rail.

Fidell Urges Traffic Relief

Jay Fidell's blog post "the traffic honeymoon doesn't last forever" calls for the new mayor to address traffic congestion.

Fidell suggests that we need modern solutions - timed lights, sensored intersections, overpasses, underpasses, HOT lanes. We’re desperate for these things. The technology is there, but we ignored it during the Hannemann years. Surely, we learned something and have higher expectations now.

Unfortunately, as Fidell knows, the new mayor is focused on the rail and its $310 million per year bill for 30 years. That's if the project is ever started and if everything goes perfectly well for it. At the same time he is facing a $100 million budget shortfall and a ~$5 billion sewer consent decree with the EPA.

The new mayor gloats on TV that "he is not worried" while surrounded by the perfect storm. Asking him for synchronized traffic lights is simply too much.

The report is out. People get it!

Poll results have been steady for about 10 hours straight so the bias by rail proponents or opponents, if any, is small. People get it!



Scource: KITV.com survey on December 6-7, 2010.

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.

The Little Traffic Sign That Could ... Cause Three Freeway Accidents per Month!

This innocent looking NO RIGHT TURN ON RED sign installed by the City at the corner of University Avenue with Dole Street is actually the root cause of several rear-end accidents on the Kokohead or East-bound H-1 Freeway. Typically the accident happens between the University Avenue exit the Bingham Street exit.
This prohibitive sign in combination with two freeway off-ramps that carry a high volume of traffic from both sides of the freeway generate dangerous lines of cars on both sides of the freeway.

On the Ewa or West-bound side of the freeway, traffic to town is very slow because this is the peak direction. As such, the backlog of vehicles that go to University and Manoa is not particularly risky.

On the Kokohead or East-bound side, however, the freeway operates under extremely dangerous conditions. Two lanes, middle and left, flow at 50 to 60 miles per hour while the right lane crawls at less than 5 mph.

Here is the evidence of three crashes in less than 20 days!

Oct. 12, 2010 Rear end accident photographed at 8:52 AM
Oct. 20, 2010 Rear end accident photographed at 8:55 AM
Nov.4, 2010 Rear end accident photographed at 9:55 AM
These three accidents caused extensive congestion between the Pali Highway and University Avenue. The photo below shows bumper-to-bumper traffic as seen from the Wilder Avenue pedestrian overpass. The school bus in bottom left is moving over to the middle lane to avoid the blocked right lane and shoulder.

The City should take a lesson from itself from a similar twin right turn with a heavy flow of pedestrians at the corner of Ala Wai Boulevard and McCully Street where the sign reads NO RIGHT TURN ON RED Except from Right Lane After STOP. This more permissive management of traffic flow is required at the University Avenue twin right turn immediately to reduce the frequency of queues spilling onto the freeway and causing rear-end accidents.

This location has a clear and well delineated paths for pedestrians and vehicles and no obstructions. Issues relating to pedestrian safety with a permissive right turn on red are minimal. All other intersection corners around the UH-Manoa allow for right turn on red with no ill-effects to pedestrian safety.

Incidentally as far back as Monday, May 12, 1997 in the Honolulu Advertiser, page A-13, I complained about the city's uncoordinated traffic lights and referred specifically to the University/Dole intersection having substandard signalization.

Overall, the University Avenue freeway interchange needs an overhaul. Some alternatives were proposed in the past (Monday, January 31, 2000 Star Bulletin, “Engineer has ideas for improving H-1 flow”.) A final design and implementation are necessary to reduce the accidents at this high risk location which includes the only two ramps in our entire freeway system that are managed by YIELD signs!

Click for additional coverage of this issue by Hawaii News Now's Tim Sakahara.

Update on Honolulu Rail Programmatic Agreement

Courtesy of KHON's Andrew Pereira who reveals that five (5) agencies need to approve the PA in addition to the Governor's signature before the FTA can issue the Record on Decision.

The signatories to the programmatic agreement include the U.S. Navy, the Federal Transit Administration, the State Historic Preservation Officer and the Advisory Council on Historic Preservation.

David Kimo Frankel of the Native Hawaiian Legal Corporation insists the city is putting the cart before the horse. He says under state law an archaeological inventory survey, which maps out where native Hawaii burial sites are likely to be encountered along the rail line from East Kapolei to Ala Moana, must be conducted before the programmatic agreement can be signed by the required parties.

Link to the full article RAIL FACES TALL HURDLE