Prolonged recession adds to Sound Transit budget hole
The slow recovery is widening Sound Transit's budget hole, to $3.9 billion long-term.
Seattle Times transportation reporter
Sales-tax trendsREGIONAL ECONOMIST
DICK CONWAY gives these decade-by-decade trend figures, showing the slump that's hurting transit sales taxes. He expects the Puget Sound area will return to sustained growth.
1980s: Average sales-tax growth of 8.8 percent yearly.
1990s: Continued growth, at 5.9 percent yearly.
2000s: Average 1.2 percent, blamed on dot-com and housing busts.
2010s: Rebound to 5.4 percent, as the unemployed and underemployed return to work.
2020s: Leveling at 4.7 percent, as labor force is stable.
The hole in Sound Transit's long-term budget is growing deeper, as the Great Recession continues to drag down the agency's tax income.
New estimates say the projected shortfall is $3.9 billion — up from $3.1 billion last October — in an $18 billion program to expand Link light rail to Overlake, north Federal Way and Lynnwood by the early 2020s, and to add to bus and commuter-rail service this decade.
Finance Director Brian McCartan briefed transit-board members on the dismal figures Thursday, based on calculations from independent economist Dick Conway.
Sound Transit has looked to trim spending, and to survive without a big reserve fund to cover cost overruns, in hopes of keeping its 15-year plan on schedule. Voters approved the package two years ago.
Sound Transit collects a sales tax of 9 cents per $10 purchase, a car-tab tax of $30 per $10,000 of vehicle value and approved federal grants that total more than $1.3 billion to date.
Even if things go badly, Sound Transit has legal power to delay or shorten projects, and to prolong its taxes, so there is little political risk the agency will be forced to cancel major lines.
But the agency's projected shortfall could complicate strategic decisions in the next year or so:
• Rail managers would like to add a Link park-and-ride stop reaching South 200th Street in SeaTac, almost two miles past the current terminus at Seattle-Tacoma International Airport, perhaps by 2016. The agency was already $34 million short of the roughly $300 million needed for that before the latest bad news.
• The Seattle City Council last month asked Sound Transit to help pay to stretch the future First Hill Streetcar north to East Aloha Street, if money is left over after building the $133 million streetcar line from the International District/Chinatown Station to the future Capitol Hill Station.
• Transit-board members have cited economic woes as one obstacle to upgrading the future East Link design, where many Bellevue residents and City Council members seek both a downtown tunnel and a possibly costlier route that bypasses the residential Surrey Downs neighborhood.
Board members didn't talk about these kinds of hard choices Thursday, but intend to do so this fall.
Members are highly fearful of reneging on promises, said John Niles, a light-rail critic who observed the board's May retreat in Bremerton. A decade ago, Sound Transit lost prestige and nearly collapsed when it was learned light-rail costs would be double what a 1996 ballot plan had promised.
"It [the financial situation] gives them the chance to be real tough, when people suggest changing things out in the community," Niles said.
The current cheaper construction market means lower bids, which helps somewhat, said Sound Transit's McCartan. Officials have thought about actually speeding up construction of some projects — notably the South 200th Street station — for that reason.
Rail isn't the only form of transportation facing budget threats:
• A planned six-lane Highway 520 toll bridge has long been underfunded, and continues to be $2 billion short of the $4.65 billion price tag, so that it will require more taxes or tolls on the neighboring I-90 bridge.
• The $2 billion tunneled portion of Highway 99, replacing the Alaskan Way Viaduct, is funded on paper, but politicians argue about who is responsible in case of any cost overruns.
• King County Metro Transit has warned that massive cuts are looming from its own sales-tax slump, but has managed to keep and even grow service using fare increases, cash reserves, income from a 2006 voter-approved sales-tax measure, and federal stimulus dollars.
Economic recovery in the region hasn't come as soon as transit officials expected, and the local labor market isn't expected to rebound to 2008 levels until 2013.
On what he calls the brighter side, McCartan said the region added 3,600 jobs in the first quarter this year, and a "double-dip recession" is not likely. He forecasts an eventual return to average growth in sales-tax revenue of 5 percent per year through 2039.
With help from new sales taxes and federal grants, Sound Transit construction is robust. Work is under way at sites for both the Husky Stadium and Capitol Hill stations along a $1.9 billion tunnel that is expected to open in 2016. Money could become scarce after that, according to McCartan.
Even if the financial crunch deepens, another available strategy is to hold a third vote later this decade to request more taxes and to add more light-rail lines to reach Everett, Tacoma and downtown Redmond — and possibly even Ballard and Issaquah.
Part of that cash might backfill any shortages in the voter-approved 2008 program, which in turn is helping complete the original 1996 plan.
Mike Lindblom: 206-515-5631
Sam and Sara Lucchese create handmade pasta out of their kitchen-garage adjacent to their Ballard home. Here, they illustrate the final steps in making pappardelle pasta.