The Missing $7 Billion
How do you lose $7 billion? You have to be entrusted with the public's money, for starters. Sound Transit - which claims to strive for credibility even while hiding the true costs of its projects (try to find an honest amount anywhere in it public documents online) - says it recently counted some of its costs twice when estimating its Sound Transit 2 light-rail expansion price tag. Instead of $37.9 billion, a figure it reluctantly confirmed last month to the Seattle Times, the estimate was lowered to $30.7 billion last week after someone outside the agency noticed the accounting error - a double counting of $7 billion in construction financing costs (really, how do you lose $7 billion?). But even that "lower" $30 billion figure revealed by the Times is something the agency prefers not to discuss, telling the public the tab is only $10.8 billion, which is unequivocally false. The public, which is to vote on ST2 this fall, in fact will pay as much as $20 billion more over 50 years once other costs, including financing, are added. ST thinks interest on borrowing doesn't count, any more than you'd count it when buying a house (even though, unlike a house buyer who might sell the place after a few years, taxpayers will have to pay the full tab for ST2). That's the lie most government agencies perpetuate when they want to peddle a plan, and some, such as the Seattle Monorail Project, deservedly fail once true costs are exposed. Yet ST doesn't hold itself to such standards. After all, this is the agency that, facing billions in overruns, declared its projects on time and on budget by just forgetting about the first five years. It's a great way to run a transit agency: If the train's late, just move the clock.
4 comment(s)
Sean says:
No one lost 7 billion dollars, Rick. Ironic that you\'d start an article about trusting financial figures with a willfully misleading distortion of your own.
Posted On: Monday, Jul. 16 2007 @ 10:26AM
Frank @ OR says:
Sound Transit is borrowing money at an eminently reasonable rate: 2-3x the cost of the project (which is, in fact, about what it costs to borrow money to buy a house). The Monorail, on the other hand, was constrained by its revenue stream, the MVET, and thus had to borrow money at an egregous 5-6x the cost of the project (hence the now-infamous $11B figure for the $2B green line).
Posted On: Monday, Jul. 16 2007 @ 12:32PM
RReagan says:
We should be shocked - but I suppose we aren\'t, after the monorail debacle - that they could lose $7 billion in their double accountings and find it only after someone OUTSIDE the agency pointed it out. What else have they lost within their so-called accounting system? We should demand they hire whoever it was that discovered their error to review their figures!
Posted On: Tuesday, Jul. 17 2007 @ 7:45AM
MonorailFan says:
Nobody got canned? I don\'t care what their borrowing rate is or whether the money was figuratively lost in the paperwork - they miscounted by $7 FREAKIN\' BILLION! A public agency that makes a mistake like that can\'t be trusted. If it was a private business, heads would roll from the top on down.
Posted On: Tuesday, Jul. 17 2007 @ 7:58AM