Monday, January 31, 2011

Honolulu's Boards: A Black Humor Sample

The Sunday (Jan. 30, 2011) newspaper editorial explains that the Transit Authority will be a powerful volunteer board that oversees billions. Of course I find it entirely unnecessary.

"At the most we would need a separate division at the city within the Department of Transportation Services," Prevedouros said. "The largest problem is lack of accountability."

Mayor Peter Carlisle disagrees.

Amusingly, on the cover of the same newspaper on the same day(!) we see this:

Federal regulators have raised serious questions about the actions of the volunteer board overseeing the state's second-largest credit union while the directors are facing increasing internal criticism about the level of benefits they are giving themselves. (This board oversees over one billion dollars in assets.)

And let's look at the performance of another board that oversees the state Employees' Retirement System pension fund. See the graph below. They started with 9.9 billion in 2000 and ended up with 9.8 billion in 2010, while the number of pensioners has increased. We now face roughly a 10 billion dollar underfunding.

So what's the verdict on unelected boards managing billions? Broken Trust should be a good hint understood by those who have at least a casual appreciation for history. Carlisle excluded, of course.

Thursday, January 27, 2011

Malama Aina? No! Can Start Construction? No!

Two great articles were published in Hawaii Reporter today.

Honolulu Rail May Stop Traffic
| Hawaii Reporter

Hawai`i is a place where uncommon nature has been patient with common humanity for hundreds of years. Though we have run over it with concrete, it still engages us with views of towering mountains, and the beautiful blue sea.

So when we who love Hawaii think about just it is what we love, I wonder how much thought has been given to the incompatibility of the steel-on-steel rail, atop massive slabs of concrete to the Hawaii we love?

Malama Aina? ... We have done our beautiful islands enough harm. Now, more than ever, we should be their keepers. If we love Hawai`i, if we love O’ahu, if we love Honolulu, how did we say yes to rail?

Is the City Allowed to Start Construction on Honolulu Rail? | Hawaii Reporter

The terminology used by the FTA to outline these two levels of construction authority is Pre-Award Authority and Letter of No Prejudice.

The city has not come out and explained these requirements to the public. Therefore, it is time for the city council and the media to ask for clarity.

Here are some questions to ask the city to get them to explain where they are in the FTA New starts process:

1. Please explain the difference between the Pre-Award Construction Authority that is applied when Honolulu receives its Record of Decision and the construction authority that comes with a Letter of No Prejudice?

2. Please tell us when you are going to apply for permission to enter into Final Design? Please tell us what the city needs to do in order to make this application?

3. Please tell us what will be accomplished in Final Design and why it will take almost a year to complete?

Monday, January 24, 2011

The Bills are in the Billions 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.

Monday, January 3, 2011

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.