SANDAG On How It Overestimated Revenue From Tax Hike
December 22, 2016 3:29 p.m.
Kim Kawada, chief deputy executive director, SANDAG
We all know that sitting in traffic jams is not the best way to spend your time and traffic is only getting worse in San Diego. The agency responsible for planning ahead to make sure that we can keep San Diego moving is SANDAG the San Diego Association of governments. Have raised billions of dollars to widen freeways expand trolley lines and build bike paths. As we learn on Tuesday from voice of San Diego reporter Andrew keeps the money for future projects is much tighter than previous projections would have us believe. The question is will SANDAG be able to keep improving our transit system to keep up with this growing population? Here to talking with us about that is Kim who is chief executive director. At your last board meeting they told you to build the projects they would have to raise an extra $17 billion over the next about 40 years. Why would the financial forecast so far off.
I do not believe the financial forecasts were so far off in terms of what we learned and shared with our board on Friday was that we have a great need for infrastructure in the San Diego region and transit is one part of that. One of the reasons we have updated the forecast is the boy just asked us after the results of the election to take a look at the transit program and we looked at our capital cost and actual cost side to take a closer look at the revenue side.
How did the analyst over the -- overestimate the revenue by so much.
In terms of the revenue we took a closer look at our forecasting and we generally estimate forecast in terms of population and travel quite well. I think they are reliable. When we have to layer on and take a look at sales tax revenue which by nature is unpredictable in terms of the up and down economic cycles with that we would take a closer look at that in part due to the media reports and some of the work we were doing internally already with the long term forecast. What we looked at was that our revenue forecasts were a bit optimistic and we sort of moved in a direction to look at independent consensus forecasts. That led us to project our revenues for the remainder of the program.
How much is the overestimation?
The overestimation I would say is about 15% from a we included in our last finance for the remaining projects in the corridors program.
Does that translate into dollars in any way?
It is about $3 billion.
It's not just that there was an overestimation of sales tax what of some of the other reasons we have that pacing is now?
We look at the cost and revenue side. On the cost side taken a look at the program with a fresh eye we used our most updated cost estimates which the board approved and our latest information is from the latest regional plan that the board approved last October. That's where we started rather than relying on early cost estimates that were done more than a decade ago.
On the rubber meets the road what projects could this affect?
We do not believe it will affect any projects. Looking back at our history in terms of 30 years back we've been able to leverage it with a three to one ratio. Every dollar we have raised we have attracted about three dollars of state local and federal.-- dollars to match the projects looking forward to the next three decades have it about that same level of matching funds we do predict that at this point we would be completing the projects in the major corridors program.
So Andrew Keats was telling us that he would have to leverage those tax dollars even more effectively to more than a three to one ratio in order to meet this goal.
I think it is perhaps a little bit more than the three to one ratio but it is in the same general ballpark and I think looking 30 years out there is a number of things that we do expect. We have continuing sources beyond TransNet there are federal funds that the state and federal level that continue to flow in the region and as we have discussed there are opportunities both in the near-term and long-term horizon for infrastructure funding at the state and federal levels.
Have you change the forecasting method looking forward.
We have change the forecasting method at this interim point and we are looking at our forecasting structure like with any tool that we update we look at our models periodically from time to time. Over the course of next year as we get into put -- preparing our next round of forecasts we will be updating our models.
If it does mean construction of fewer projects who gets to decide which of the projects might be put -- is probably not erased but put on the back.
I don't believe at this time that we are anticipating not completed any projects that are included in the ordinance. We have 30 years to go and predicting and developing a long-term capital program over a 30 year period can be challenging. We realize that but at this point given where revenues are coming in we believe the house of the transit program is sounds.
Basically you are hoping that SANDAG will be able to raise more than a three to one ratio to tackle this very challenging some of money and meet the goal.
I believe we will make -- meet the goal. Let's say that the year 2048 arrives and there are one or two projects to remain to be completed but the revenues do not stop flowing in terms of dollars that come to the region for transportation. If you look in the past we have the original transit measure that they approved in 1987. It was a 20 year measure that ended in 2008. We have about three projects remaining to be completed from that midcoast project and a couple other projects that we have done past that deadline. I think there is a commitment from Sandag and that board to keep the promises made to voters when the measure was approved.
Do you think that the new administration might make it more or less challenging to get that 3-1 match.
I think what is promising from being talked about at the federal level was infrastructure and the fact that infrastructure and the number as much as $1 trillion for infrastructure has been thrown out at the national level but at least that discussion is occurring. As we know we will need to look into the details as federal infrastructure packages are introduced. It is a topic at the federal level. Even voters here at the San Diego region when we did meet that's two thirds photo threshold which is a fairly high mark to meet 58% of voters in the San Diego region wanted proof Addison infrastructure but it is proof that there is a need in the region and across the nation.
You are keeping an eye the mistake Outlook -- optimistic outlook. My guess.
That was Kim that she deputy director at the San Diego Association of governments.