June 29, 2005
$11 Billion is the best-case scenario

While everybody's fixated on an estimated total cost of $11 billion for the Monorail, bear in mind that this is the best-case scenario. It assumes that car tab revenues will grow 6.1% a year, which is highly optimistic. Even the droolingly optimistic fantasists at Sound Transit project 4.8% growth in the vehicle tax base. A difference of 1.3% might not sound like a lot, but do the math. When compounded over 50 years, a 4.8% growth rate produces less than 2/3 the total revenue of a 6.1% rate. So under a more realistic forecast, the tax would be collected for years longer and with billions more in total debt service than in the more fantastic forecast that is being widely reported.

The latest Seattle Weekly (not so weak this week) pegs the total cost at $14 billion, citing a recent analysis from OnTrack.

The other assumption that the Conorail is making is that the system will break even from operations and that it won't run a deficit or require any additional taxpayer subsidies. If you believe that one, then you'd probably let me sell you another hole for your head.

Posted by Stefan Sharkansky at June 29, 2005 03:24 PM | Email This
Comments
1. Why does this not suprise me. Not a clod of dirt turned, price has gone form 1.75 B to 11 B.

Nonorail. Just say no.

If any public works project every had a bigger don't do it sign hanging on it I haven't seen it. Yet folks who are not guests at Western State are still pushing it.

Argghh!

Posted by: JCM on June 29, 2005 03:35 PM
2. Well, there certainly should be a large no-no sign on the monorail tourist attraction project.

I think, though, that the tunnel idea is just about on the same level. Seattle city government members obviously don't get out much. Must not have heard of Boston's Big Dig ... tens of billions over budget, more than a deacade behind schedule, and the finished product leaks and drops chunks of concrete on commuters ... and Boston isn't even in a seismic high risk area!

Posted by: Norman MacLeod on June 29, 2005 03:43 PM
3. I don't live in King County, but am affected by Sound Transit. The scary thing about both ST and the monorail is that both boards use the claim that they can levy and collect taxes "in perpetuity" to achieve their goals - despite what the voters thought they were voting for. The monorail's faith in car tabs is ludicrous. The whole goal of the Seattle transit crowd is to eliminate cars or car usage. If they even come close, there will be even more significant revenue shortfall. By the way, is Seattle using the same car valuation formula the state used that made people crave $30 tabs?

This is government out of control. If a voter approved project changes in scope by more than 10% in time, cost or deliverables, the project should automatically go back to the voters for approval.

People work hard for their money. When a project is approved, voters do it based on what they think they can tolerate in tax burden. When the project cost doubles (or worse), the voters no longer perceive a tolerable level of taxation exists and they then look for ways to reduce the tax burden - all because the government is CARELESS with OUR money.

Posted by: SouthernRoots on June 29, 2005 03:48 PM
4. I REPEAT !!
"The Project" is not likely to outlive the debt. Dump it, while there'sstill a chance.

Posted by: JT on June 29, 2005 03:59 PM
5. If the city council votes to go ahead with this massive boondoggle, they will in affect be giving the middle finger to the public. Sure as hell am glad I won't be paying for it.

Posted by: Tucker on June 29, 2005 04:02 PM
6. SouthernRoots - Just look at it this way...this is an admission that, no matter how much they would love to outlaw our cars, they won't be able to do so for the next 45 years!

Posted by: alphabet soup on June 29, 2005 04:06 PM
7. Soup,

You are not paying attention. They (liberals) recognize no limitations to taxation.
We have seen that they accept the idea of votes from dead and imaginary people, and
Governursemama (actually ober alles nurse mama) Gregoire is riven asunder with angst about our non-existent drought.

What makes you believe they will not impute license tabs for defunct and non-existent motor vehicles?

Shame on you -- please don't do that again!

Posted by: Amused by liberals on June 29, 2005 04:21 PM
8. Soup and Amused,

It seems that too much focus is on the cars. Perhaps a whole new slate of taxes should be created:

Driveway square footage tax
Garage tax
Carport tax
Parking lot tax
Transit access tax
Long distance transit tax
Commute tax
Breathing Seattle air surcharge tax
Seattle view of the sunset over the Olympics tax
Scenic route tax for the viaduct
Sidewalk commute tax
Crosswalk toll booths

Sorry for giving too many other ideas, I guess there is lots more room for silliness in Seattle...

Posted by: SouthernRoots on June 29, 2005 04:46 PM
9. What a joke to say the system will break even.
Who is going to pay $50 a ticket to ride that thing even if you had reason to go from Ballard to West Seattle?

Holy cow, it sounds like the total price just went from 11 billion to 14 billion in just a week. Wonder what the price tag will be two years from now?

They wouldn’t lie to us would they?

Posted by: Brad on June 29, 2005 05:02 PM
10. Actually, Stefan it would NOT be the "best-case" scenario.

It's not the worst-case, either, but it's much closer to that end of the spectrum.

The 6.1% figure is actually the MID-range of the forecast that was conducted for the monorail agency, regardless of the figure Sound Transit is using.

The $11B financing plan also makes the following assumptions:

Tax evasion will not be reduced any further.

Contingency funds and reserves will be spent.

The agency will have to pay for all utility relocations.

The agency will have to pay all state sales tax. (Note that the Tacoma Narrows Bridge project just had their tax waived, much to the benefit of both the project and taxpayers.)

The agency will not collect any more than 1.4% MVET. (Some folks are calling to raise the tax.)

The agency will not receive funds from other sources. (Some folks are suggesting that a portion of Viaduct mitigation funds could be used to purchase one or more trains since they would clearly pick up some of the people displaced from the Viaduct.)

In short, there are plenty of more favorable assumptions that could be made to reduce that $11B number, but that is a figure more accurately representing the true risks on this Project.

Posted by: FoM Prez on June 29, 2005 05:35 PM
11. Hey, "FoM (Friends of the Monorail) Prez" --

who are you? why don't you sign your real name?
where does your organization get its money from?

Posted by: Stefan Sharkansky on June 29, 2005 05:38 PM
12. I sent e-mails out to all of the Silly Council members. Some responded and one even admitted that no public transportation system ANYWHERE in the country operates in the black. They all run a deficit.

Die, die, die .....

Posted by: BananaLand(aka Iguana) on June 29, 2005 07:51 PM
13. ... it sounds to me like if there are any significant problems, the bond is below water. That is to say, tax revenue won't cover the interest.

No worries, there's never been a problem with a bond default in Washington. Investors won't be scared off and they'll just snap up the bonds.

Whoops.

Posted by: Dishman on June 29, 2005 07:54 PM
14. ... it sounds to me like if there are any significant problems, the bond is below water. That is to say, tax revenue won't cover the interest.

No worries, there's never been a problem with a bond default in Washington. Investors won't be scared off and they'll just snap up the bonds.

Whoops.

Posted by: Dishman on June 29, 2005 08:02 PM
15. I sat next to a guy from Seattle on my way home from Las Vegas a few months ago. He told me that he and his friends all registered their cars elsewhere.

If everyone in Seattle rides buses, light rail and monorail, they would probably sell their cars and then who will pay the tax? It is a very bad assumption to think that the car tab tax will keep going up.

The more cigarettes are taxed, the more the sales of cigarettes go down. At least that's what the health nuts who keep passing taxes on cigarettes say! I think it's probably true too, Washington State certainly isn't getting any more taxes on cigarettes or gasoline from me!
I'm on a tax strike against the state and I plan on depriving the state of at least 2000 bucks this year in taxes.

The monorail is insanity and the voters will take vengenance at the polls.........

Posted by: sgmmac on June 30, 2005 03:53 AM
16. Give me a break, Stefan... My name is Michael Taylor-Judd, and I am not hard to find.

As for asking where we get our money from, we DON'T get any money from anywhere.

Unlike some other organizations in this city claiming to represent "concerned citizens," we don't have an office and we don't have a top-notch PR firm on our payroll. We have a small bank account with probably less than $200 in it right now. We're all a bunch of citizens who struggle to find some time to be active when we're not at our regular day jobs.

Posted by: FoM Prez on June 30, 2005 11:32 AM
17. FoM Prez,

LIBERALS: a bunch of citizens who struggle to find some time to be active

Want to be useful? Take up knitting or needle-point.

Posted by: Amused by liberals on June 30, 2005 12:17 PM
18. Imagine that... while you knit or needle-point, and bitch in the blogosphere, some of us actually want to go out and try to improve our communities.

What a "crazy" concept!

Posted by: FoM Prez on June 30, 2005 01:22 PM
19. "What a "crazy" concept!"

The only crazy concept I see here is the no-norail. Half-baked and hackneyed, the stench has reached street level.

Incapable of meeting the requirements on any standard, the "leadership" is foundering (deservedly so), and the citizens who were duped into advancing this sham are getting an eyeful of what boondoggle looks like up close and personal.

Ask anyone who has opened their license renewal form!

You are promoting an albatross - how is that "improve(ing) our communities"?

Posted by: alphabet soup on July 3, 2005 10:17 AM
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