Rail Math Just Doesn’t Add Up
Wednesday - May 18, 2011
The recent lawsuit regarding rail could possibly spell the end of the controversial project.
It’s interesting to note that despite the escalating and exorbitant cost, incredibly negative impact to the aesthetics of our island, the self-admitted inability to reduce traffic congestion, the looming spectre of eminent domain and the threat to historical/burial sites, there is still support for this behemoth of a public works project.
One must come to the conclusion that the only reason for this support is steeped in the Gospel-like promise of jobs, jobs and more jobs.
First, I empathize with the dire and uncertain financial situations in which families find themselves.
Our family takes it one day at a time as many others do.
For those who believe that rail is the economic salvation of our community, look at the basic arithmetic.
The accepted cost of construction is estimated to be between $5.5 billion and $6 billion. Yes, some of this cost will be exported to tourists and the GET they pay, but the vast majority of the cost will be borne by residents of the City and County of Honolulu.
In reviewing the 2002 model used in job creation estimates quoted by the city, the selling point is that just over 10,000 new jobs would be created by the rail project.
But those 2002 estimates were supplanted with a revised 2005 job creation report, and the numbers were substantially less. According to a 2010 Star-Advertiser report, UH economics professor Sumner LaCroix acknowledged there would be job creation from rail, but the figure would be substantially less.
LaCroix maintains the new jobs number would be just over 7,000, about a third less than original estimates.
Another consideration, says LaCroix, is the proportionately large amount of money that will be exported to pay for equipment, consultancy and other expenditures that won’t benefit Hawaii’s local job market.
If we were to consider the cost of rail at $6 billion (without calculating ongoing maintenance costs, labor expenses and ancillary expenditures) with new job creation pegged at 7,000, a rudimentary calculation concludes the cost of a single job is just over $851,000.
Granted, there may be further extrapolations, but at face value, it will cost hundreds of thousands of dollars to create a single job during construction.
This simple calculation demonstrates that rail is not only not affordable, but without any other demonstrable benefit, it becomes a prohibitively expensive “workfare” program.
Oh, and by the way, consider the City and supporters have collected about $600 million in GET surcharges, have spent about $400 with a balance of about $200 million.
Nonetheless, the City has encumbered more than $2 billion in funds directed to rail contracts.
How can you have $2 billion in liabilities when you have $200 million in hand?
In real life you’d be in bankruptcy court.
In government, you get re-elected.
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