Journalism won’t die if you donate. Support Voice of San Diego today!
Transnet, the sales tax hike approved in 2004, is officially on track to bring in $9 billion instead of the $14 billion promised to voters, according to revenue figures obtained by Voice of San Diego.
The numbers also show Measure A, another sales tax hike that voters rejected in November, would have raised $14 billion for transportation projects across the region, not $18 billion, the number promoted by SANDAG, the agency behind the measure.
SANDAG has corrected a crucial error in its economic forecast that led it to overstate revenue totals for both measures.
The agency’s been under increasing pressure over the error, especially since Voice of San Diego revealed that executives at the agency were made aware of the problem more than a year ago, and months before they put Measure A on the ballot, relying on the revenue expectations they knew were flawed.
But the agency has yet to announce officially the difference between its newly adopted forecast and the one it relied on for more than a decade. The old forecast was categorically wrong, not simply an overly optimistic view of the economy. SANDAG discovered the old forecast included a mistake in its source data.
Two weeks ago, at a meeting of a committee created to oversee TransNet, one of the committee members asked SANDAG’s chief economist, Ray Major, if he knew what the difference was between TransNet’s original $14 billion revenue expectation, and the newly adopted forecast.
“There has been a great deal of talk in the media … about the variation in forecasts, and I haven’t seen any quantification of the variance,” said Richard Vortmann. “What I’m looking for is, what’s the difference? What’s the total dollar difference?”
Major said the agency did not have those numbers. He said he would try to produce them.
But using revenue figures obtained through multiple public records requests, we’ve done the calculations ourselves.
Voters approved TransNet in 2004 after being told it would raise $14 billion for regional transportation projects. SANDAG would then take that money and use it as bait to attract state and federal funds to pay for the overall project list.
The agency now officially expects the measure to bring in just $9 billion, after adjusting for inflation so the revenue figures are expressed in the value of a dollar from 2002, just like the original TransNet forecast. It’s as close to an apples-to-apples comparison as you can get.
There are some differences. The adjusted revenue expectation includes the amount of money that was actually collected through the first eight years of the tax, rather than a forecast. Partially thanks to the recession, collections never approached what the forecast predicted in those first years. Plus, the adjusted expectations rely on SANDAG’s most recent population forecast, which is less aggressive than the one it relied on for TransNet. That pushes revenue expectations down, too.
The $9 billion total is nearly identical to a quick-and-dirty estimate we made in November simply by taking the average annual growth in revenues since the bottom of the recession and extending it out until the end of the measure.
To complete all of TransNet’s promised projects, SANDAG will now need to bring in $3.41 from federal and state sources for every $1 it collects locally. On the ballot, the agency merely committed to bringing in $1 from outside San Diego for every $1 it collected locally. Since 1988, it has brought in about $3 from state and federal sources for every $1 from its sales tax, thanks in part to rare opportunities like the federal stimulus. If it replicates its past performance, however, it would not fulfill its promise to voters.
In a statement, SANDAG spokesman David Hicks said the agency now expects TransNet to collect between $9 billion and $11 billion. The range reflects one of the agency’s attempts to correct its forecasting debacle in the future: It will now express its revenue forecasts with a range of possible outcomes, instead of with a single number.
“The forecast revenue range is intended to capture the uncertainties associated with various factors that go into forecasting, and the margin of error associated with each forecast data set,” Hicks wrote. He said SANDAG had not yet compared the $18 billion revenue expectation that Measure A carried on the November ballot to what it would collect using the new forceast. We did that comparison too.
Based on the forecast – which was officially adopted just a month after Measure A failed – the tax increase would have brought in $14 billion, instead of the $18 billion SANDAG promised voters.
Although Hicks said the agency had not looked into how much Measure A would have raised, according to SANDAG’s new forecast, the new total is identical to one offered by SANDAG Board Chair Ron Roberts two weeks ago in an interview.
“I know there are board members who think I’m responsible for this, and that’s fine with me,” Roberts told me. “But I never would have stood out there if I knew it was only going to raise $14 billion, and told people it would raise $18 billion.”
At SANDAG’s Friday board meeting, staff is scheduled to break down what went wrong with its forecast and how it intends to fix the process in the future. Seven board members have also requested the agency OK an investigation into the issue, which could be approved Friday as well.