Wednesday, August 6, 2014

A Sign of the End of the Line for SMART?

A Sign of the End of the Line for SMART?

A Sign of the End of the Line for SMART?
Today, August 5th, the Marin IJ’s Dick Spotswood published an article “Marin close to state cap for sales tax measures“  that Marin’s county and city sales taxes are about to reach their limit of 2% (on top of the existing 7.5% state sales tax).  If (when) sales taxes reach this ceiling this potentially has serious, possibly disastrous consequences for SMART, if not all of Marina and Sonoma’s taxpayers.
SMART  polled voters and even though it needed 1/2c to build and run scaled back to 1/4c as the polls showed 1/4c tax raise is all voters would support. But if the sales tax limit cap is reached – and the planes for new taxes that would reach this limit are already stacked up and lining up to land – then this may not be feasible. The alternative is to hike property taxes – which are much harder to get through and place a much greater burden on homeowners(as opposed to people who work in or who are passing through the county but do not live here).

keep-calm-and-no-excusesExcuse #1: “But It’s Because of the Recession”

Already SMART is blaming 2 year delays and cutting line length in half  on the recession. This  is a *phony* argument. Supervisors Arnold and Sears used it just last week in an op ed entitled “SMART’s making steady progress toward starting service“.
Then the same excuse was used again today, August 5th, by the chairman of “Friends of SMART” in a Sonoma Press Democrat “In response to the grand jury criticism“.

Analyzing the Excuse

Sure, the recession reduced sales, but only temporarily. But the recession also significantly benefited SMART:
  • SMART’s bonds were locked in at much lower interest rates reducing bonded indebtedness.
  • Construction costs were reduced due to the high unemployment during the construction period, and when construction work was being put out to bid
  • The recession was used to justify delaying the start-up, allowing them to save up more sales taxes before commencing operation. SMART will bleed ~$12m/year once operational.
Net – net the recession’s affect on SMART was a wash financially. Even if the recession hadn’t occurred, SMART would have been stuck at the same place – 1/2 the promised length, delayed completion, not enough money to sustain operations…
SMART has a leveraged financial structure – the bond’s debt needs to be serviced. So if (when) revenue declines the financial impact is magnified. That will increase the pressure whereby to continue operation the train will either have to cannibalize other genuinely cost effective transportation projects (buses…) or return to collect more taxes.
SMART could barely afford to build and operate a 35 mile line before the recession hit. They can’t now without additional bail-outs from TAM.  In 2011 with some wheeler-dealing from Steve Kinsey they broke the promise not to encroach on funding for other transportation projects and obtained  $8m from the Transportation Authority of Marin to balance the budget.  The other funding source they surely have their eyes on is RM2 – bridge toll taxes.
The whole thing is lining up to be one major fiasco. Civil Grand Juries in not one but both counties  - Sonoma and Marin –have issued  warnings that there is a need for course correction and much greater financial oversight.  The Sonoma Grand Jury advised that SMART hires of an outside economist
Artists conception of Sarah Palin's Gravina Island Bridge
Artists conception of Sarah Palin’s Gravina Island Bridge
This is all starting to smell like a Gravina’s bridge to nowhere in Alaska. Who will be Marin’s Sarah Palin(s) ? The field is certainly packed with contendors.  I surely hope Marin isn’t turned into a laughing stock, while we, the residents are left to mop up the foreseeable damage through taxes, pollution and environmental impact.

No comments:

Post a Comment