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An internal document obtained by Voice of San Diego shows that SANDAG staffers offered SANDAG board members and the public explanations for its ongoing scandal that they knew were false or incomplete.
It also shows the agency discussed in November 2016 how it had misled voters on a ballot measure in 2004 – at least nine months before the deception was revealed by Voice of San Diego – but declined to tell the board or the public.
In an investigative series, Voice of San Diego has revealed that SANDAG misled the public on two separate ballot measures. One was passed 13 years ago, after the agency told voters the tax would bring in far more than the agency actually expected.
After our stories, SANDAG staff has faced questions from its board of directors and the public.
To answer them, staff members dug into the situation. In November 2016, they produced an internal presentation that explicitly spelled out how the agency had drastically scaled back the amount it expected to raise from TransNet, a 2004 ballot measure. In recent months, SANDAG staff have made a series of pronouncements about what happened that now look questionable.
The presentation not only spells out that voters were misled on the 2004 ballot, as Voice of San Diego reported earlier this month. It also shows that agency staffers were aware of the 2004 deception last year, in the weeks just after the scandal broke. But as the agency worked to explain away new revelations, it never disclosed the 2004 issue to the board or public despite repeated opportunities to do so.
For instance, a month after staff created the presentation, SANDAG Chief Economist Ray Major went to the board of directors to concede that TransNet was running an extreme revenue shortfall. Major told the board nothing of the problems with the 2004 ballot figure that contributed to that shortfall and that were outlined in the staff presentation.
Three months after that, agency staff again discussed the TransNet shortfall before the board and again Major did not disclose that the agency had cut its 2004 TransNet forecast by $1.3 billion nearly a year before the election without telling voters.
And this month, after a Voice of San Diego report revealed the misleading figure used on the 2004 ballot, Major again discussed the issue before a board subcommittee, and again did not disclose that agency staff had researched and openly discussed the 2004 ballot total last fall.
In short, if SANDAG somehow did not realize that it had misled voters back in 2004, it has been undeniably aware of the issue since last November. And yet, in three hearings before board members discussing the agency’s forecasting problems, leadership has three times opted not to mention the out-of-date forecast that went before voters in 2004.
SANDAG officials did not respond to a series of questions about the staff presentation outlining the agency’s failure to update its revenue expectations for voters in 2004. We asked who was present for the meeting in which the presentation was given, why the presentation was created in the first place and why the information hadn’t been communicated to board members in the hearings since the scandal broke.
SANDAG has said it spent the weeks immediately before and after the election looking into TransNet’s shortfall and problems with Measure A’s revenue forecast, after Voice of San Diego’s first stories on the matter. That’s the same time period during which the presentation was created.
But when presented earlier this month with Voice of San Diego’s discovery of the 2004 ballot error, SANDAG spokesman David Hicks said he needed extra time to respond because the issue happened 15 years ago and relevant staff no longer worked there. Eleven days later, he confirmed the error, but said staff only found it by looking through the retired chief economist’s old files, even though the presentation from November explicitly spells it all out.
SANDAG chief executive Garry Gallegos has run the agency since 2001
In all three of those hearings since the scandal broke, Major has shifted blame away from the agency by saying the Great Recession is responsible for TransNet’s revenue shortfall. But the agency’s own presentation makes clear that staff was not expecting TransNet to bring in $14.2 billion four years before the recession began.
When TransNet went before voters in 2004, SANDAG promised a host of projects around the county predicated on the idea that it would bring in $14.2 billion. By the time voters went to the polls, though, SANDAG had 11 months earlier resolved that the tax would bring in only $12.9 billion. That $1.3 billion gap is roughly the amount the agency expects to spend on the Mid-Coast Trolley, one of the program’s hallmark projects.
But revenues have come in far shy of even that lowered mark. The tax is now on pace to bring in closer to $9 billion.
The agency uses its local revenue to attract state and federal funds. It assumes that San Diego will bring in at least $1 in outside funding for every $1 in local revenue, so its project list is considerably bigger than what could be purchased with local revenue alone.
At the same time, the cost of the projects promised in TransNet have gone up considerably, which is common of large capital projects. SANDAG failed, however, for nearly a full year to disclose that the costs had ballooned by $8 billion.
In December, SANDAG finally updated those project costs and adopted a new, more conservative forecast. That projection showed a $17.3 billion funding shortfall for the remainder of the program. To complete all of the projects, the agency now needs to bring in $3.41 from outside San Diego for every $1 it collects locally. That’s more than it’s ever done in its history.
But when SANDAG disclosed the shortfall to the board, Major’s description was hardly clear.
“In conclusion, we’re forecasting approximately $17.3 billion to be collected through the remainder of the program, of which $6.3 billion will be through the major corridor program,” he said.
What Major was trying to say was that the agency needed to find $17.3 billion to complete the TransNet program, and it had no clear idea where that money would come from.
In February, Major presented to the board a more detailed discussion of the error that led to the flawed revenue estimate for Measure A, which voters rejected in November. SANDAG staff had identified flaws in the forecast nearly a year before the election, and panicked when they did, but the agency went forward with the overstated revenue estimate anyhow. At the February hearing, Major discussed how his staff discovered it and what the agency would do to keep such issues from happening again.
One of those steps, he said, was to “define an escalation path to make sure issues that are discovered will go to upper management and the board of directors.”
Yet at that same meeting, he did not tell the board that the agency went to voters in 2004 telling them TransNet would raise $14.2 billion, when it had already formally adopted a forecast that said it would raise far less.
In July, Major went to a SANDAG board subcommittee and described the progress of staff’s new quality-control efforts.
There, he referenced Voice of San Diego’s story on the agency’s failure to disclose the most up-to-date expectations for tax revenue on the 2004 ballot, but never mentioned that staff had identified the same problem last year, months before the story was published.
Instead, he again said the shortfall is attributable to the recession.