We are being asked to begin paying an extra 13 percent on our general excise tax to cover an uncertain part of the unknown cost of some kind of commuter rail system, which someday may possibly go from somewhere to someplace else. Or maybe it won’t.

Our planners seem undeterred by the fact that these projects always cost more than projected, while usage is always less than projected.

*1) A worldwide study showed that the average cost of rail construction exceeds projections by over 40 percent.

*2) Usage is always far less than expected, and is mainly confined to 4 hours per day, 5 days per week.

*3) Light rail is by far the most expensive method per passenger mile of moving people; nothing else even comes close.

*4) Commuter rail uses more energy per passenger than a bus, or even an efficient car.

Are we now supposed to trust the planning, construction and management of Hawaii’s largest-ever government capital project — which is still completely undefine — to the same people who cannot even figure out how to collect the tax to pay for this unspecified fantasy? Give me a break.

Where’s the revolt?

”’John Corboy is a resident of Mililani and a member of the Board of Grassroot Institute of Hawaii.”’

”’This editorial is intended to provoke thought, discussion and an examination of issues. It does not reflect official policy of the Grassroot Institute of Hawaii. See the GRIH Web site at:”’ http://www.grassrootinstitute.org/

”’HawaiiReporter.com reports the real news, and prints all editorials submitted, even if they do not represent the viewpoint of the editors, as long as they are written clearly. Send editorials to”’ mailto:Malia@HawaiiReporter.com

”Offshoots”

Daily Policy Digest

State and Local Issues

THE MUNI MUSHROOM

Most people know that the federal government is amassing large debts and unfunded liabilities. But they may be unaware that state and local governments are doing the same, says Chris Edwards, director of tax policy at the Cato Institute.

With incentives like income tax exemption on state and local (“municipal”) bond interest, governments have been borrowing in large numbers, but servicing the debt has left many in financial crisis:

Pension plans for state and local employees are underfunded by about $700 billion, according to Barclays Global Investors.
Health plans for employees are underfunded by about $1 trillion, according to Mercer Human Resources.

Overall, state and local debt jumped from $1.19 trillion in 2000 to $1.85 trillion by 2005, an increase of 55 percent, according to the Federal Reserve Board.

However, there are ways to alleviate the situation, says Edwards:

Congress should end the tax exemption for municipal debt in exchange for cutting overall tax rates on savings and investment.
States should use greater pay-as-you-go or current financing for needed infrastructure.

States should privatize things such as highways and airports that can support themselves by charging users.

States should cut employee retirement benefits and move toward pre-funded structures such as defined-contribution pensions and health savings accounts.

With debt rising at every level of government, says Edwards, tomorrow’s families will have to fend off tax hikes on all three fronts: federal, state and local.

Source: Chris Edwards, “As Munis Mushroom, A Tax Toll Looms,” Investor’s Business Daily, July 8, 2006

For text (subscription required):

http://www.investors.com/editorial/IBDArticles.asp?artsec=20&artnum=5&issue=20060707

For more on State and Local Issues:

http://www.ncpa.org/pd/state/state.html

”Sprout of the Day”

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