Friday, December 10, 2010

Lingle’s Legacy Seen in Rail Finance Analyses; Her Study Stirred the Pot but Ignored Project Benefits

Linda Lingle, Hawaii’s two-term anti-rail governor who left office on Monday, had it figured out when she ordered up a study of Honolulu rail’s financial plan. Governor Neil Abercrombie correctly observed that the study wasn’t within her responsibilities, but he undoubtedly also sensed what she was up to.

Lingle correctly anticipated that Infrastructure Management Group’s study would be highly critical of the City’s plans and projections. Honolulu Mayor Peter Carlisle and others have noted the involvement of an anti-rail activist on the study team who helped IMG reach its “pre-determined” conclusions.

So Lingle knew that a study released in her final days would be like a smoke bomb tossed into the room, clouding the issues and giving heart to anti-railers who now split their time defending both activist Tom Rubin’s reputation and the study itself from charges of bias.

It also kick-started subscription news service Civil Beat’s own analysis. Civil Beat posted the first part of a series of articles today headlined “Civil Beat Analysis: City’s Rail Tax Plan Optimistic”

The “If Factor”

Civil Beat’s analysis itself is “problematic” because of its own assumptions and use of the “if factor.” Most of CB’s analysis is available only to subscribers, and while we respect the service's reasons for limiting access to the meat of its online stories, we feel compelled to quote from this section if we’re to address CB’s methodology.

CB said the City’s predictions for General Excise Tax collections 2007-2010 were close to actual collections – 98.5 percent close.

“(Fiscal year 2011), however, hasn’t gone according to plan. Earnings received by the city during the first half of Fiscal Year 2011 totaled $78.3 million. IF (emphasis added) pro-rated for the rest of the fiscal year, that would add up to 91.3 percent of the $171.5 million in surcharge revenue projected by the city.
“Many may say 91.3 percent is pretty darn good – an A-minus, perhaps. But IF (emphasis added) the city’s $3 billion projections for GET surcharge revenue for the next dozen years are 91.3 percent on target, that would create a $250 million shortfall. And that assumes the city’s projections remain as accurate in 2022 as they have been in 2010.”

You can see where we’re headed. “If this, if that” is not a sound methodology with which to judge the City’s financial plan. It just as easily could be argued that IF the economy turns around aggressively at home and abroad and IF tourism mushrooms and IF the green energy revolution takes root in Hawaii and IF…IF…IF…. GET collections might just as easily be higher than projected IF the economy is stronger than predicted.

“Analysis Is Not Foolproof”

CB’s piece continues with an evaluation of the forecast model developed by Parsons Brinckerhoff, noting that it has five main components – retail spending, personal and professional services, construction contracting, miscellaneous rentals, and hotels and lodging.

While certainly sophisticated, this type of analysis is not foolproof….,” CB says. “In short, there remains no certainty that the model is an accurate predictor of the future. And while its average annual growth rate of nearly 6 percent is not impossible, it’s certainly optimistic.”

When Civil Beat finds an accurate predictor of the future, we hope it will post it in the open-access section of its website. Very little accurately predicts the future except the prediction of change from previous predictions. In short, CB’s skeptical tone is worthy of rebuttal, and Yes2Rail hopes to see one from the City and its consultants soon enough; the City already is preparing a response to the IMG study.

Project Benefits Missing

What’s missing from all the financial plan analyses is any mention of the anticipated benefits rail will have for Oahu. Finances are one component, and so far the analyses are focused a dozen years out. Rail will benefit this community for generations, not decades.

With increases in population and traffic congestion also predictable, an analysis that ignores the imperative to restore commuting mobility by building a congestion-free transportation mode is like watching a football game while focused only on one half of the field or only on your team’s offense.

Analyzing a game’s likely outcome while ignoring half the action would be foolish. Linda Lingle's study did that by not addressing project benefits. Will Civil Beat?

12:25 pm Update: Unfortunately, the preceding paragraph's question has been answered in the negative by CB reporter/host Michael Levine, who wrote CB's analysis. Here's his comment added less than an hour ago to the story's Discussion section:
"My story did not suggest that not building the project is preferable. This first story was limited to a review of the GET revenue projections. The entire series will be limited to a review of the conflicting financial documents. I do not expect that Civl Beat is going to conduct a cost-benefit analysis of rail as a whole, and I do not expect that we're going to reach a conclusion this week or next on whether the city should continue to move forward with building rail."

1 comment:

Hannah in Manoa said...

Thank you for clarifying the critical issue, and CB's policy. Clearly, a benefit-cost analysis must be released next week, so the people of Honolulu understand that the project is INDISPENSABLE to the future of this island, and ultimately, the Hawai'i Nei.