Recession 2011

Many economists were warning that the 2008-2009 will be a "double dip" recession because of the mounting federal, state and local debts in the U.S.

2010 was not a "banner year" and expectations were that 2011 would be a better one. Did you realize what happened in the first quarter of 2011?

• Momentous changes are occurring in the Arab world including change in regimes, bloodbaths and large increases in oil prices. This in turn makes the recovery of the world economy from the long 2008-2009 recession harder. (See trend below.)
  
• Then a few days ago the world's third largest economy was hit with (perhaps) 10,000 deaths and well over one trillion dollar bill in damages.
  
• Japan, a country of about 127 million people accounts for about 16% of the annual tourist revenues of Hawaii and Japan's debt situation is actually worse than USA’s (at least the federal portion of it.)
• Australia is now expending over $6 billion to cover the damages of extensive floods in late 2010.
• New Zealand's second largest city was hit by a strong earthquake on February 22 causing 166 deaths and damages estimated at $11 billion, or 7% of the country's GDP.
• Australia, population 22 million and New Zealand, population 4 million account for 1% of of the annual tourist revenues of Hawaii.

The direct impacts of these to Hawaii will be more expensive energy, more expensive air fares and much fewer visitors from Japan and from economies that are strongly linked to the economy of Japan, and fewer visitors from Down Under

Higher consumer basket prices and lower revenues and taxes from the tourist industry are a given. Expect that the second half of 2011 will be a mild (at best) recession for Hawaii.

A Simple Analysis of USA’s Debt to China and Japan

The March 5, 2011 issue of The Economist states that USA’s debt to China at the end of 2010 in the form of U.S. Treasury notes was 30% higher than had been thought. China holds $1.19 Trillion in U.S. Treasury notes and Japan holds $882 Billion of the same.

So this form of debt of the USA to China and Japan comes to $2,072,000,000,000.

Let’s try to get a handle on this. The U.S. has about 140 million taxpayers (indeed, less than half of the population files for federal taxes) and 20% of them pay minimal amounts. That leaves about 100 million taxpayers holding this bag.

What’s your share? $20,720!

The average U.S. taxpayer owes China and Japan about $21,000. Your rate will vary depending on your income: If you make $50,000 you pay roughly 15% of that to the IRS, but if you make $200,000 you pay 30% of that to the IRS.

We got ourselves into a deep (and deepening) hole. There is one way to lessen this: Devalue the dollar to ½ its current worth. In this way, our average taxpayer debt to China and Japan becomes about $10,000.

Unfortunately at the same time everything at Walmart and at the gas pump doubles in price. Overnight the gas price goes from $4 to $8 per gallon. And a large portion of the population becomes impoverished.

Twenty plus years of tax and spend and entitlements will come full circle. Entitlements are the wrong way to pull people out of poverty. They ballooned the national and local debts. And the poor will pay the heaviest price no matter how hard “socially minded” decision makes have tried to help them.

Hawaii Clean Energy: Part 2 -- Summary of a Presentation

HAWAII’S RENEWABLE ENERGY MANDATES, and HOW IT AFFECTS EVERYONE

Presentation to Hawaii Conservatives in Hilo, Hawaii, on February 27, 2011

We were honored to be addressed by two distinguished speakers at our Feb 27 forum: Michael Kaleikini, manager of Puna Geothermal Ventures, on “Geothermal Energy in Hawaii" and Dr. Panos Prevedouros, Professor of Civil Engineering at University of Hawaii, on “Statewide Implications of the Mandates". Questions were entertained after both speakers concluded.

Mr. Kaleikini described the history and present role of Puna Geothermal Ventures production on the Big Island. The first geothermal wells were drilled in the 1960s in Kapoho. In 1981, the state had a pilot program to prove the viability of geothermal energy production. The plant produced 3 MW of power, and was designed to last 3 years but stayed in production for 6-7 years. In 1993 PGV came on line, the first commercial geothermal plant in Hawaii. It was located on the lower rift zone of Kilauea because “ that is where the resource is."

It uses a hybrid / combined cycle where steam and hot water (brine) comes up in production wells from about 6000 ft down, is used to drive turbines for power generation, and then is returned underground via injection wells. It is a 100% renewable and closed-loop system. Today there are 6 production wells and 4 injection wells in operation.

PGV has 34 full-time employees and contractors. The State of Hawaii owns the mineral rights, and PGV pays royalties to the state and county. Proceeds from those royalties have gone to support the Hele-on bus, lifeguards, park maintenance and other public projects. PGV is owned by ORMAT Corporation, head quartered in Nevada, with geothermal projects located around the globe. They are the only vertically integrated geothermal energy company, involved with drilling, manufacturing of turbines and associated specialized geothermal equipment and electrical power production.

Currently PGV is under contract with HELCO to provide 30MW of electricity, and is permitted to go to 60 MW. They provided 17% of the Big Island total electricity last year, and they just recently signed a new contract to provide an additional 8MW at a fixed price not tied to the price of oil (as their present contract is).

Dr. Prevedouros then addressed us.

He pointed out that Hawaii had the most expensive electricity in the nation, double that of California and 3 times the national average (36 cent per kw-hour on the Big Island). Our energy sources as a state are 77% from oil, 15% coal and the rest “renewable". The Big Island is about 68% oil and 32% renewable, of which geothermal is about 18% and wind 11%. The state is therefore vulnerable to the availability of oil. American national policy has supposedly been to reduce our need for oil as an energy source, but through many different administrations little progress has been made. As Jon Stewart has said about this, "Fool me once shame on you. Fool me twice shame on me. Fool me 8 times...am I a @#$% idiot?"

Hawaii has had "renewable energy" mandates since 2001. In 2008, the Lingle administration increased the goal to be 70% "clean" energy by 2030, of which 40% is to be in electrical production and 30% from efficiencies and alternate fuel sources. However, if we kept present oil and coal usage constant, and massively increased production of biomass, H-power (trash), geothermal, wind and solar, we would still not meet the projected demand in 2025.

Part of the problem is how does one define "clean"? Is it energy that reduces greenhouse gases, hazardous chemicals (like mercury and sulfur dioxide), environmental degradation associated from production (like mine tailings and drilling leaks or cutting forests to plow more fields for biofuels), or the pollution hazards of combustion (such as trash)?

In addition, it is true that cheap energy = growth, and this is essential for our economic system. Most of our economic growth is tied to natural resource extraction, which will be limited if resources are not renewable. However, that does not apply to renewable sources of energy, including geothermal, hydro, solar, trash burning, nuclear and potentially algae to fuel.

What is needed is a realistic approach, not pipe dreams", Dr. Prevedouros stated.

• In Spain, it was found that for every 1 "green job" financed by the Spanish taxpayers, 2.2. jobs were lost from the overall economy.

• In Germany, "green" jobs financed by the government disappeared as soon as government subsidies ended.

• One electrical vehicle is the equivalent of a small house in power consumption.

• He himself had a solar system on his roof at home, but the $14,000 system cost him a net $4000 only after state and federal subsidies

• After 30 months, countless TV appearances, and $80 million spent on an extravagant PR campaign, T. Boone Pickens has finally admitted the obvious: The wind energy business isn't a very good one. He's abandoning the wind business to focus on natural gas. On a national scale, it is expected the US will transition heavily from present 49% coal/21% natural gas to 40% cheap natural gas/25% coal.

• Denmark, the poster child of wind energy production at 20%, has to sell much of its peak power to neighboring Norway and buy from them a steady base load in return, as wind is incapable of a steady supply.

• Wind cannot work in Hawaii, as we have no nearby neighbor for such a deal. What are we going to do, turn the elevators on in Waikiki when the wind blows, then turn them off when it stops? Impossible."

• Turning food to energy is no good either. " Food prices world wide are rising as a result. " Former vice president Al Gore said that he regrets supporting first generation corn-based ethanol subsidies while he was in office. Gore said his support for corn-based ethanol subsidies was rooted more in his desire to cultivate farm votes for his presidential run in 2000 than in doing what was right for the environment: "It is not a good policy to have these massive subsidies for first-generation ethanol".

Dr. Prevedouros stated "Energy policy should be grounded in realism, and should pursue the ‘Double A's’: Abundant and Affordable."

Energy policy in the US has consisted of fantasies: fantastical claims of imminent energy independence or imminent technology breakthroughs. Wind and solar power are unreliable for baseload electricity; even with subsidies, they do not scale up enough to reduce fossil fuel use significantly.

Governments simultaneously spend too little and too much on clean-tech. Too little on research, development and demonstration of new technologies, and too much subsidizing the commercialization of older technologies that don’t stand on their own. If clean-tech companies can make a profit making subsidized technologies, why would they try to invent anything better?

So what makes sense for Hawaii?

Clarity of goals is needed

• ENERGY goals pertain to total energy management for electricity and transportation, local and long-distance.
• POWER goals pertain to the management of electricity generation and consumption.
• Hawaii’s priorities should be on ENERGY. Clean POWER cannot bring food, supplies and visitors.

On the Big Island, increase geothermal for complete electrical supply. He notes the geothermal reserve on Earth is 70 million QUADs (hot rock only) but the USA needs only 100 QUAD/yr. In the Philippines they already use 27% geothermal, and in Iceland 100% for electrical power.

On Oahu and Maui, increase trash burning and clean coal as electrical power sources. Australia has a resource of over 75 billion tons of high quality and inexpensive coal: low in sulfur and reduced ash, high in energy content. India recently contracted to purchase 8 billion tons and was building port facilities for that alone. Honolulu should consider that as an alternative to oil.

On Oahu, increased "green bin" biomass use for methanol vehicle fuel, cooking grease for biodiesel, and long-term use of biofuels from algae. Algae have the potential of being both renewable, greater affordable energy potential than wind or solar, and are attracting serious investment.

Also not out of consideration would be nuclear. The Nuclear Regulatory Commission is processing permit applications for at least 26 new power plants in U.S. Gallop Poll shows 62% favor the technology, and Obama wants to triple the amount of loan guarantees for new reactors. The current price tag for a large nuclear plant: $6-8 billion. Traditional nuclear power plants are not suitable for Hawaii. However, there is the possibility of extending lengthy power cables to decommissioned Navy vessel with small reactors (50 MW). Also promising are the "micro-reactors" such as the Toshiba 4S (Super Safe, Small and Simple) nuclear power system able to supply 10 MW of electricity for 30 years without any new fuel. The plant is simply buried and then dug up and replaced when used up.

The achievable goal would be to bring Hawaii’s overall present 75% oil usage down to 40% by 2040.

Hawaii Clean Energy: Part 1 -- Goals and Reality

Hawaii's past history for electricity generation does not bode well for its "clean energy" goals.

Hawaii has a goal of reaching 40% renewable energy by 2040. Possible? Yes! Probable? Definitely not!

Here is why, based on our past history as documented in DBEDT statistics. I used 1993 as the reference year because in 1993 three large energy projects came online: Two on Oahu, the AES coal plant and the H-Power plant, and one on the Big Island, the Puna Geothermal Venture plant.

As a result of these large new power plant investments, oil consumption in 1993 dropped by 11.5% compared to 1992. Ten years later, in 2002 Hawaii was back at the 1992 level of oil consumption for electricity generation!

DBEDT statistics I could find had 2008 as the most recent year in the data series, so I used the 1993 to 2008 period and estimated that Hawaii energy needs increased by 12.75%. I assumed that this will be the growth of demand for electricity for 2025.

I also assumed that:
(1) Both oil and coal consumption will stay constant at the 2008 level.
(2) Covanta will successfully bring online a third "boiler" and increase power production by 50%, by expanding from 2 boilers to 3 boilers.
(3) Hydroelectric power will stay constant.

Based on these assumptions, all the additional energy will need to be produced from renewable energy sources. How much renewable energy does Hawaii need to add compared to its 2008 renewable power plant set?

• 300% increase in geothermal
• 300% increase in wind
• 300% increase in biomass, and
• 1,000% increase in solar

[Note: these are numerical examples of renewable energy shares that may satisfy Hawaii's electricity needs in 2025. These shares of renewable sources of electric power are not a recommended strategy for Hawaii.]

All these investments in renewable energy are only sufficient for keeping the oil and coal "dependency" constant at 2008 levels.

If these investments were to be executed in the next 14 years, Hawaii's renewable attainment will be 19.8% in 2025.


The pie-in-the-sky state goal calls for 33% renewable electricity generation by 2025. My 19.8% estimate is optimistic: If by 2025 Oahu has a working rail system and several thousand electric and plug-in hybrid vehicles, they will require much more electric power than the amount I used for my estimations of Hawaii's 2025 power needs. As a result, the renewable energy attainment will be lower than 19.8%.

It is critically important for Hawaii to (1) set realistic goals, and (2) ensure that the right types and technologies of clean and renewable energy are installed.

This article in the Hawaii Tribune-Herald contains some of my views on energy for Hawaii.

Cut, Cut, Cut -- Tax, Tax, Tax

Recent samples of governance by Cuts and Taxes, as published in Hawaii Reporter

Reckless Spending -- Panos' Version

Thomas Sowell wrote a great article on Reckless Spending in Real Clear Politics. I copied his article below and modified it for our Honolulu rail situation. The bold words are my edits to Sowell's article. Small world really... Washington reckless spending and Honolulu reckless spending is one and the same.

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Nothing more clearly illustrates the utter irresponsibility of Peter Carlisle than his advocacy of "rail." The man is not stupid. He knows how to use words that will sound wonderful to people who do not bother to stop and think.

High-speed rail may be feasible in parts of Europe or Japan, where the population density is much higher than in Hawaii. But, without enough people packed into a given space, there will never be enough riders to repay the high cost of building and maintaining a high-speed rail system.

Building a rail system between Kapolei and Honolulu may sound great to people who don't give it any serious thought. But we are a more spread-out country than London, Paris or Tokyo.

However little Mayor Carlisle knows or cares about economics, he knows a lot about politics-- and especially political rhetoric. "Rail" is simply word to justify continued expansion of government spending. So are words like "investment in education" or "investment" in any number of other things, which serves the same political purpose.

Who cares what the realities are behind these nice-sounding words? Carlisle leave that to the economists, the statisticians and the historians. His point is to win the votes of people who know little or nothing about economics, history or statistics. At the same time that Carlisle held his fake "ceremonial groundbreaking," he also blanketed his supporters with $150 to $1,000 per person Election 2012 fundraiser solicitation!

To talk glibly about spending more money on "rail" when the national debt has just passed a milestone, by exceeding the total value of our annual output, for the first time in more than half a century, is world-class chutzpa. The last time the U.S. national debt exceeded the value of our entire annual output, it was due to the cost of fighting World War II.

When World War II ended, in less than four years of American participation, we began paying down the national debt. But our current national debt has been expanding by leaps and bounds in peacetime-- and with no sign of an end in sight for the next decade.

Since more than 40 percent of our national debt is owed to foreigners, this means that goods and services produced by Americans, equal in value to more than 40 percent of our current output, will have to be sent overseas, free of charge, by either this generation or the generations that follow.

Since the generations that follow cannot vote today, the Obama administration's latest budget keeps the spending increasing, while regaling us with wonderful plans for big reductions in government spending-- years from now, after Obama is gone.

Make no mistake about it, spending wins votes, and votes are the ultimate bottom line for politicians. If fancy words and lofty visions are enough to get the voters to go along with more spending, then expect to hear a lot of fancy words and lofty visions.

One of the most successful political ploys is to promise people things without having the money to pay for them. Then, when others want to cut back on the things that have been promised, blame them for lacking the compassion of those who wrote the checks without enough money in the bank to cover them.

If all else fails, politicians can always say that we can pay for the things they promised us by raising taxes on "the rich." However, history shows that, when tax rates go up to very high levels, people put more of their money in tax shelters, so the government ends up collecting less revenue than before.

But history is so yesterday. What is far more exciting is to think of rail in the future, even if it is speeding us toward bankruptcy.

Dallas Light Rail: Costs Up, Ridership Down

Time and again mainland cities shine a (dark) light on Honolulu's future with rail. Of course given our tiny population size and huge rail construction costs, the actual consequences will be far worse for Honolulu than these "achievements" of the Dallas Area Rapid Transit (DART), as summarized by the National Center for Policy Analysis:

• The fixed-route (bus and rail) ridership on DART is less than it was 10 years ago, despite population in the service area growing 17 percent since 2000.
• In that same period, DART has collected almost $4 billion in local sales taxes and hundreds of millions of federal tax dollars on a system that makes hardly a dent in area traffic congestion.
• DART's staff has grown from just under 2,800 employees in 2000 to 3,900 in 2010, an increase of 39 percent.
• For comparison, the Dallas district of the state Transportation Department -- which includes seven counties with a population of more than 4 million and oversees almost 11,000 lane miles of highways -- has fewer than 1,000 employees.
• DART's operating expenses from 2000 to 2010 grew from $242 million to $402 million, a growth of 66 percent to operate a system with declining ridership.
• Meanwhile, as predicted, the agency has reduced the number of bus miles to force ridership onto the light rail system, in many cases making the commute last longer for the regular rider.
• Every time a rider stepped on a rail car or bus in 2010, local taxpayers were paying a $4.45 subsidy for that ride, compared with $2.94 in 2000.
  

Reject the “Jobs” Justification for Transportation Projects

I fully agree with Robert Poole's article which in part reads as follows:

• On a tour of China, government officials took renown economist Milton Friedman to a major construction site, where Dr. Friedman expressed surprise at seeing legions of workers digging away with shovels. When his host responded that a major purpose of the project was to create jobs, Friedman replied that if that was the case, they should equip the workers with spoons instead of shovels.

• That point was underscored in a report issued last month by the Bipartisan Policy Center. “Strengthening Connections Between Transportation Investments and Economic Growth”, written by economist Douglas Holtz-Eakin and civil engineering and urban planning expert Martin Wachs.

• Instead of focusing on short-term construction job-creation, the authors argue for a focus on long-term returns from infrastructure investment. “Over the long-term, higher productivity—the ability to generate more output and income from each dollar of capital or hour of work—is the key to higher labor earnings and improved standards of living,” they write.

• Hence, infrastructure policy should select projects that do the most to enhance long-term productivity—as did the creation of the Interstate Highway System, which dramatically lowered the cost of personal and freight transportation, leading to the world’s most productive logistics system.

Speaking of highways, three California Congressmen are asking that the funds of the California high speed boondoggle be diverted to correct the ills of SR 99. Part of their positions is as follows:

• The economic and environmental benefits of SR 99 improvements are strongly contrasted by the uncertainty of California’s now infamous bullet train, which has been described by the national press as “the train to nowhere.” Providing the state the option to redirect high speed rail funding to SR 99 will give state and local leaders the opportunity to step-back from what is likely to become a bottomless pit of spending.

The bottom line is government needs to invest taxes in productive and necessary infrastructure. For Hawaii this means road repairs, water and sewer line repairs, and airport and harbor upgrades within our ability to borrow and pay. All these are necessary projects and with proper scheduling and financing they can get done without breaking the citizens' backs.

The airport modernization, and the Middle Street merge fix projects that Gov. Abercrombie wants to do should be done asap. The Mufi/Carlsisle rail boondoggle needs to be thrown in the trash. The accumulated rail funds should be used immediately for the Middle Street construction, the Honolulu airport upgrades and for the design of the secondary treatment facility mandated by the EPA for our Sand Island effluent treatment plant. Now these are construction and engineering jobs worth paying for.

Albert Einstein and Neil Armstrong Discuss Honolulu's Rail

Click to see my short movie for your infotainment.

Sorry, this very popular animation no longer exists. XTRANORMAL, the free service on which I developed it went out of business.

Did Honolulu City Council Get the Memo from U.S. Congress?

Minutes ago I sent this message to our City Council:

Dear Council Members,

On Tuesday House Transportation Committee Chairman John Mica, R-Fla. said this: “Rather than focusing on the Northeast Corridor, the most congested corridor in the nation and the only corridor owned by the federal government, the Administration continues to squander limited taxpayer dollars on marginal projects.”
Source: http://transportation.house.gov/news/PRArticle.aspx?NewsID=1065

By this statement it is clear that:

(1) Mica urges focus on the Northeast Corridor and he does not seem interested in preserving funds for the Florida ("his own") rail project.

(2) If it comes to a choice for Mica between SunRail and Honolulu's rail, he would most likely opt to save SunRail. It does not matter that SunRail is an FRA project and Honolulu Rail is an FTA project. It's all coming from the federal budget, specifically, the Highway Trust Fund. (Indeed, more rail projects does mean more potholes and falling bridges.)

(3) Mica knows that projects are rated good, marginal or poor. He's not interested in marginal and poor projects. Honolulu's overall FTA rating is medium (marginal) and our financial plan is defective and the population projections used to derive ridership are wrong.

At a minimum, the Honolulu City Council must not approve any expenditures on rail construction until the FFGA is concluded and the contribution is the promised $1.85 Billion.

After that point, the responsibility of adding $4 Billion debt onto Oahu taxpayers will be all yours.

Aloha,
Panos

Who Opposes Honolulu Elevated Rail?

Pearl Johnson lists some of the groups opposing the elevated rail proposal in the letter to the editor of the Honolulu Star Advertiser copied below. Quite a few!

Additional groups include the HonoluluTraffic.com group, the Fix Now Campaign of yours truly and many architects, engineers and planners. Let's not forget that Bishop Estate favors light rail. Also Federal Judges oppose the rail route using Halekawila Street.

The Sierra Club and Blue Planet Foundations have not had time yet to assess the colossal environmental and pollution impact of this boondoggle, but they are welcome to join when they peel off rail's pseudogreen labels and discover all the soot.

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Groups oppose elevated rail

Recent media portrayal of the growing opposition to the city's rail transit plan was unfortunately reduced to a political dust-up between former Gov. Ben Cayetano and Mayor Peter Carlisle. It obscured our shared belief that the city's proposed elevated heavy rail project will destroy mauka-makai view planes, create a physical barrier between the city and our famed waterfront and disturb native Hawaiian burial grounds along its right-of-way.

We consequently are united in opposing the construction of an elevated heavy-rail system through historic downtown Honolulu and strongly urge consideration of a less destructive and more neighborhood-friendly system.

"We" includes the League of Women Voters of Honolulu, The Outdoor Circle, Hawaii's Thousand Friends, Life of the Land, Residents Along The Rail, Save Oahu Farmland Alliance, Friends of Makakilo, Hoa'aina o Hawai'i'imiloa of Leeward Community College and Donors of Irwin Park.

Everyone must learn about the realities of the city's plan and the steamroller process that is propelling it. There's much more to come.

Pearl Johnson
League of Women Voters of Honolulu

Where is The Money for The Rail

Where is the Money? is one question everyone should be asking of the Carlisle Administration.

The other is: How dare you start construction with no guarantee of the federal monies?

Today Minneapolis/Saint Paul concluded their funding agreement with the FTA for Light Rail. See article below.

Notes relevant to Honolulu:

• Twin Cities did not start before they got their money.
• Their cost is under one billion. Ours is close to six billion for one third the population!
• They got a 50% match like we got in 1990. Now our match is about 30%.
• Over the last few days I contacted experts who said that rarely if ever a city starts construction before the Full Funding Grant Agreement is concluded.
• Except for Honolulu. Mayor Harris and Transit Planner Hamayasu (also in charge of the rail project now) jumped the gun with the BRT. In a case of national embarrassment, the FTA withdrew Honolulu's Record on Decision. (History has a way of repeating itself...)
  

Hot off the press: Twin Cities’ light rail project clears money hurdle

Minneapolis — The Metropolitan Council and other local agencies finally have the news they have been seeking: The Federal Transit Administration has sent to Congress the grant agreement for the Central Corridor light rail project.

The move launches a 60-day review various officials described as a courtesy, meaning Congress is expected to approve the grant agreement in early April.

That will let the FTA and the Met Council sign the agreement contract that guarantees the federal government will pay for half of the $957 million light rail project. Officials in Washington, D.C., had delayed delivery of the grant agreement several times, but it was not clear why.

The Central Corridor, the biggest public works project in Minnesota history, will connect the downtowns of St. Paul and Minneapolis via an 11-mile route when it opens in 2014.

Rail Will Cost About $3 Billion

I would like to preserve this gem from August 19, 2006 for historical purposes because The Honolulu Advertiser is history and its server may disappear. Please read it and then take a look at my four 2011 updates at the end.

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MAYOR WILL INSIST CITY LIVE WITHIN ITS MEANS

As the City and County of Honolulu proceeds with its analysis of O'ahu's transportation future and holds community meetings to solicit public input, the cost of a proposed fixed guideway is a common topic of discussion.

As is their role, the professional planners and engineers involved in this Honolulu High-Capacity Transit Corridor Project are gathering data, making analyses and evaluations, and preparing recommendations for the City Council, which will make the final selection of a transit alternative later this year. The planners and engineers are envisioning a system where money is not a primary factor, a transit network that accommodates all needs well into the future, a world-class fixed guideway that rivals those of the great cities around the world.

That is not the world in which we live. It is my responsibility to balance needs with resources. This has meant that we've had to make some tough fiscal decisions over the past year-and-a-half, foregoing the nice-to-have for the need-to-have.

The transit system the city ultimately will support will meet our immediate needs and our budget, estimated at around $3 billion. This is called a "minimal operable system" in the parlance of transportation engineering. Yes, a multifaceted, multimodal approach to solving our growing traffic mess falls within the need-to-have, but I want to be careful that we do not exceed our financial limits.

If revenues from the general excise tax surcharge provide more money [1] for our transportation coffers, or if private partnerships [2] generate a major infusion of cash, or if we receive any financial windfalls [3] for mass transit, then we can consider spending more money to expand the system.

Until then, I will continue to insist that we live within our means.[4]

Mufi Hannemann
Mayor

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I inserted four notes in the concluding part to provide 2011 updates:

[1] The surcharge provided over $100 million LESS than expected between 2007 and 2011 and as a result TheBus budget was raided to sore up the "budget."

[2] Hannemann knew he was kidding with this one. No private monies are available for rail transit. Rail projects are money pits. On the contrary, developers are expecting tax breaks (which means taxpayer monies) to develop around stations.

[3] Here the expectations went to the wild side. Windfalls were expected while the 2011 Congress is all about cuts.

[4] The current version of living within our means (as Hannemann put it), or getting our house in order (as Carlisle put it) is furloughing the City's own employees, operating under an EPA mandate that is expected to cost well over $4 Billion, and at the same time pursuing a train that has doubled in cost!

By the way, the Minimum Operating Segment that the letter refers to is now what we present as the planned 20-mile system from Kapolei to Ala Moana Center, the first six miles of which is the train to nowhere starting over half a mile outside Kapolei and ending in Pearl Highlands, going through Oahu's last prime agricultural lands. This video produced by the City shows the destruction of agriculture and the prevailing low densities that are inappropriate for elevated heavy rail. The picture below shows the destruction of Waipahu.

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.

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?

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.

Gasoline Price Comparisons: Taxes not Octanes Matter

The original subject is gasoline prices but before we know it, the story becomes about taxes. The graph below shows the stark contrast between 10 states in the U.S. and 10 countries in the European Union, or E.U.


Among the states shown, the lowest gas price is in Oklahoma at $2.532/gallon and the highest is in Hawaii at $3.54/gallon. This one dollar difference is actually a 40% difference. Among the EU countries shown, the lowest gas price is in Spain at $5.496/gallon and the highest is in The Netherlands at $7.382/gallon, a 34% difference between them. The gasoline price in The Netherlands is 110% higher than Hawaii’s. (June 2010 US$ and EU euro rates.)

A similar situation is observed for a small sample of worldwide islands (see below). Most island gasoline prices are twice as high as those in Hawaii. Despite the high prices, all cities in the islands shown have significant problems with congestion. This is because gasoline pricing tends to affect vehicle choice, and has a small effect only on vehicle ownership and use.

At places where gasoline price is relatively low, the typical vehicle has a V6 engine and delivers about 20 mpg in city usage. At places where gasoline price is twice as high, the typical vehicle is a 3 or 4 cylinder subcompact delivering about 40 mpg in city usage. So based on these vehicle choices, driving 12,000 miles per year at either place costs the same for fuel.

Going back to the first graph and comparing The Netherlands with Hawaii we ask: What can possibly explain a 110% difference for the same gas? It’s not technology, it’s not manufacturing, and it’s not transportation. These are less than half of the story. The “larger half” is taxes! See below:

Governments worldwide use taxes to finance general budgets and other infrastructure. Fuel taxes are among the first to be increased when budgets cannot be met. The price of gasoline is “inelastic” as economists call it, that is, a large change in the price of gas (say, +30%) does not correspond to a proportionally large change in highway travel (-10%). This is generally true for urban travel and less so for intercity travel where larger travel reductions may be observed.

Overall the lesson here is that taxes on gasoline are a cash cow for governments. Gas tax does practically nothing in reducing congestion. It may reduce pollution somewhat by forcing lower income people to purchase smaller cars, but it does this at a very high overall cost. The overall cost is high because a large part of the economy worldwide “rides on the streets.” Foods, goods and services need to be brought to the market, delivered, installed and maintained.

Expensive gas makes for expensive commuting, repair services, food and appliances. Gas taxation limits mobility, slows economy and reduces the standard of living.

In more general terms, high energy costs exacerbated by heavy taxation on them are a brake in progress. For a vibrant economy, countries and regions need to optimize their energy portfolio and reduce the taxes on it.

Hawaii energy costs are high and climbing. If the status quo continues (oil dependency and heavy subsidies on low productivity and hyper expensive alternatives), then by definition Hawaii’s long term economic outlook cannot be rosy.

Acknowledgment: Recent civil engineering graduate Michelle Coskey conducted a large part of the research and data compilation in this article.

Yet Another U.S. City Reveals Politicians' Rail Lies

Audit: Norfolk officials knew of light-rail overruns, kept silent. Cost overruns of 45% were hidden very much like Honolulu Transit Division hides from inquiries submitted by city council members and refused to cooperate with Governor Linda Lingle consultant investigating the proposed rail's finances.

Here's the story at Norfolk, Virginia: "City officials knew costs skyrocketed since 2007 but failed to reveal information to City Council. State inspector general indicated that HRT officials intentionally misled federal, state and some city officials about the amount of the overruns, to the point of maintaining a second set of books."

Norfolk is building a 7.4-mile light-rail line, the biggest public works project in Norfolk’s history. Originally $232M, now ballooned to $338 million, paid for with federal, state and city funds.

This excerpt also makes painfully clear the difference between heavy and light rail. Light rail in Norfolk is costing them $46 million per mile including the 45% cost overruns. Honolulu's heavy rail will cost $265 million per mile plus overruns. This is yet another version of Peter Carlisle's definition of "fiscally responsible."

If you recall, the other one is that rail will cost us about one million dollars for every car it will allegedly remove.

Chromium-6 In Honolulu's Tap Water

Original post below. Please read the endnote.
===================================
In 1996 the cancer-stricken residents of Hinkley, CA won a $333 million settlement from PG&E for contaminating their tap water with hexavalent chromium, which is commonly abbreviated as chromium-6. This was the basis of the 2000 movie Erin Brockovich starring Julia Roberts.

Fast forward to 2010: Tap water from 31 of 35 U.S. cities tested contains chromium-6 according to laboratory tests commissioned by Environmental Working Group (EWG). [Click for a summary of the EWG report.] The highest levels were detected in Norman, Okla.; Honolulu, Hawaii; and Riverside, California, as the table below shows.

City ------------------------ Population ----- Chromium-6 in Tap Water
Norman, Oklahoma ---------- 89,952 --------------- 12.9 ppb
Honolulu, Hawaii ----------- 661,004 --------------- 2.00 ppb
Riverside, California ------- 280,832 --------------- 1.69 ppb
Madison, Wisconsin -------- 200,814 --------------- 1.58 ppb
San Jose, California -------- 979,000 --------------- 1.34 ppb

The EPA has not yet set a limit for chromium-6 in water despite mounting evidence of the contaminant’s toxic effects, including an EPA draft toxicological review that classifies it as “likely to be carcinogenic to humans” when consumed in drinking water.

According to EWG, the National Toxicology Program has found that chromium-6 in drinking water shows clear evidence of carcinogenic activity in laboratory animals, increasing the risk of otherwise rare gastrointestinal tumors.

California officials last year proposed setting a public health goal for chromium-6 in drinking water of 0.06 parts per billion (ppb). The level of chromium-6 in Honolulu's tap water is 33 times over this proposed limit.
===================================
Note added on December 29, 2010: This article suggests that the Chromium-6 reported amount in tap water is of no consequence to human health.

Those Who Ignore History Are Likely To Repeat It !

Cradle to Grave -- The Holistic View for Sustainability

I am from Waipahu High School. May I ask you a question about hydropower for my science project? In your opinion, will hydropower energy be a successful alternative energy in the future? Will it prevent global warming?
Donnalynn Agpaoa

Donnalynn's question is important and almost universal. Its generic version is: Will Technological Option X be a successful alternative? I'll get to the generic form later, but first, here is my answer to her.

Hydro-power can be very powerful. Its electricity generation is clean, and reliable for 100+ years, if designed properly. Kauai has a small but successful hydro-power generator.

Now lets take account of the negatives.

Hydro-power can destroy ecosystems, and in some cases villages, cities and regional cultures may disappear, as they become submerged in the reservoir (lake) behind the dam.

The dam itself may be viewed as an eyesore. Also it is somewhat risky. If it fails, there will be catastrophe downstream.

One important consideration in the total picture is the amount of steel and concrete that's needed to build the dam. The amount is massive and the manufacture of the necessary steel and concrete will create a lot of pollution. Similarly, the machinery that will build the dam will pollute as it works to build the dam, and the machinery itself created pollution when it was built.

So, say, a Caterpillar front-loader has a life of 30 years and will work at the dam site for 1.5 years. Therefore 5% of the resources and pollution that went to manufacture the front-loader need to be "billed" to the dam project.

We have to take into consideration all these cradle-to-grave sustainability impacts in order to correctly derive the total impact of the proposed hydro-power infrastructure.

As for your hydro-power question, the correct answer is that it can be green but not necessarily. We need to evaluate each and every proposed project, add all its pluses and minuses, and then decide if it is a good project.

=====

In general now, in several cases what appears "green" or "good" is the opposite when all its impacts are accounted for. For example, electricity produced by coal or oil is neither clean nor green.

That's one of the reasons that I oppose the city's elevated heavy rail plan. The promoters call it green, the engineering calls it dark black!

And that's one of the reasons environmentalists dislike the new EPA ratings for electric cars. For example, the Nissan Leaf gets 106 mpge (or MPG-equivalent). Quoting the LA Times:

"Things got hairy with the Leaf. The EPA worked out a formula in which an electric car using 33.7 kilowatt-hours of electricity was considered equivalent to a standard vehicle using a gallon of gasoline.

[On the other hand, a better] process would consider all the greenhouse gases released from the time the electricity is first generated until it is sent through transmission lines to charging units. Based on such measurements, the Leaf would rack up more than 250 grams of CO2 and other emissions every mile, according to data from the Energy Department's Argonne National Lab. Gasoline-fueled cars on average release 450 grams a mile.

The fact that the emissions came from a coal plant producing electricity in Utah is just as bad as if they came out of the tailpipe."

Sustainability is often misused for marketing purposes but in the right hands it provides a mindset and tools to get a holistic view of the impacts of a technological option as small as a solar panel or a household appliance, and as large as a hydro-power dam or a transportation system.

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.