The previous post detailed Sound Transit's Long Range Plan in their April 22, 2021 "Financial Plan Update" included a "Financial Plan Unaffordable" chart which classified $7.9B as "unfunded expenditures" because spending exceeded the amount they could borrow. The Sound Transit 3 voters approved in 2016 resulted from legislature enabling Sound Transit impose property, sales, and motor vehicle excise taxes through 2041.
Voters were told the taxes would be used to fund Sound Transit's $54.8B light rail expansion of the existing Link light rail system to Tacoma, Federal Way, Everett and Issaquah as well as to Seattle neighborhoods Ballard and West Seattle. Pierce County voted against the taxes. However, voters who approved the initiative approved the ST3 taxes not the extensions.
It was the Sound Transit Board that approved the extensions when, three years later, they approved CEO Peter Rogoff's 2019 Budget Long Range Plan for 2017-2041. The budget increased ST3 expenditures from $54B to $96B, completed all the ST3 extensions by 2041, but left Sound Transit area residents with a $17B "Tax based debt" in 2042 when ST3 taxes ended. It wasn't clear how they intended to find willing lenders without any taxes to make debt service payments beyond 2041. However the Board not only approved Rogoff's budget they renewed his contract for three years with a hefty raise.
CEO Rogoff's April 2021 budget increased spending to where the needed "Tax Based Debt" exceeded money they could borrow, "Agency Debt Capacity". The shortfall began in 2030 and increased to $7.9B from 2035 through 2041. The increased spending also resulted in 2041 "Tax Based Debt" increasing from $17B in 2019 budget to $34B in the April 2021 update. Again with no ST3 taxes to make debt service payments after 2041.
Sound Transit "concerns" led to the following in chart, "Key Considerations" in the April 22 update:
Project scope discipline remains imperative
Typical of Sound Transit, a second April presentation detailing their response, failed to include any "Project scope discipline" response. It would have reduced needed debt by eliminating some of the extensions. Instead choosing "Realignment" that delayed the extensions to when financing was available.
The presentation detailed a procedure by which the Sound Transit Board would approve the schedules for 8 "Projects". A Project's schedule was determined by which of 4 Tiers it was assigned. Tier 1 had no delay while Tier 4 projects were delayed for up to 10 years. It wasn't clear what criteria Sound Transit would use to assign a project to a Tier.
However construction delays on both Tier 3 and Tier 4 projects extended construction spending well beyond the 2041 cutoff date for ST3 taxes. Thus construction costs would add to the unfunded debt service payments when ST3 taxes ended. The presentation scheduled Sound Transit completing the realignment plan in July.
Sound Transit no longer provides videos of Board meetings so there is no record of the board's response. One indication is an April 30th letter from Sound Transit Board Chair, Kent Keel, responding to an April 22 letter from Board members Constantine, Durkan, and Balducci. They opposed the July realignment completion date, suggesting "we postpone action until next July".
His letter in response included the following "interesting" comments:
As local leaders, we know that when things get tough, we cannot stop or cut and run we must find a way to make it happen.
We have known our capital program to be unaffordable for more than a year
A delay beyond July could undermine our ability to maximize assistance from the federal government
Sound Transit is the nation's largest TIFIA borrower.
Again, Sound Transit stopped archiving videos of Board meetings in February so there's no way to view members response to the April budget. However the comments in the letter suggest several issues.(Sound Transit's "Realignment Proposal" and Chair Kent Keel's April 30 response are no longer available on their website.)
The comment "we cannot stop or cut and run, we must find a way to make it happen" indicates many Board members rejected the large spending increase in the April 2021 budget. Sound Transit spent hundreds of millions last year on a capital programs they knew were "unaffordable". (Again Sound Transit's definition of "unaffordable" was not that ST3 taxes couldn't fund it, but they couldn't borrow the money.) The April 22 letter from Board members Constantine, Durkan, and Balducci urging postponing the July realignment will result in hundreds of millions more spent on "unaffordable" extensions and a year's delay in exposing the magnitude of the problem.
Chair Kent Keel's letter called Sound Transit's July realignment, "an attempt to demonstrate the Board is acting responsibly" rather than "cutting and running". Instead it will likely demonstrate Sound Transit still doesn't recognize the need for "Project scope discipline" to meet ST3 tax revenue.
Sound Transit has already wasted billions on extensions beyond UW, SeaTac, and across I-90 Bridge that will do nothing to increase transit capacity into Seattle. They need to terminate further extensions that won't increase capacity and use available ST3 funds to expedite extension to West Seattle and Ballad that will. (The $96B 2019 budget estimate from ST3 taxes is nearly twice the $54B in 2016 vote.)
The Sound Transit Board (and lenders) needs to recognize the voters approved the taxes not the extensions. They need to end the need for "Tax Based Debt" in 2042 with no ST3 taxes to pay.
Keel's letter suggests Sound Transit Board dissatisfaction with April budget. They and the public deserve a July "Realignment" this year that will recognize the limits of ST3 taxes.. My goal as King County Executive candidate is to expose why it should not be delayed.
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