HonoluluTraffic.com members have had accountants trying to make sense of the financial data in the City's recently released Alternatives Analysis (AA) - a $10 million proposal that reviewed four possible projects to alleviate traffic in Honolulu, and ultimately recommended a fixed guideway from West Oahu to Honolulu. These accountants cannot make sense of the numbers - they don't add up.
Here's what the City plan says: The full rail alternative will cost $5.5 billion including allowance of 33 percent for contingencies and cost overruns. That is understandable.
However, the city's contention that the half percent increase to the General Excise Tax will be enough to fund the rail project, does not make sense.
Here's one way to look at it:.
- First we have to pay off the whole bond debt within 30 years because that is when the replacement and refurbishing costs become a very serious matter — more billions of dollars.
- Second, we will only have $300 million on hand collected from the new tax increase when the first construction bills come due in 2009.
- Third, the City forecasting federal funding of $1.0 billion is wishful thinking; it is more realistic and certainly more prudent to use the OMPO plan estimate of $456 million.
- Fourth, allow that we will have to pay 5.5 percent in interest costs on the bonds.
Plug in those four conditions into the computer (it's just like a mortgage calculation) and out pops annual payments of $327 million in principal and interest.
Add to that $75 million in operating losses annually and you have over $400 million in annual expense dues. On the other hand, the half percent tax collection will be about $150 million annually.
We are going to be a little short when we have $400 million going out and $150 coming in. What is going to make it up? You are.
More at http://www.Honolulutraffic.com
