Yay Rep. Reuven Carlyle!

Tax breaks are spending just as surely as writing a check and they need to be treated just the same.

Yay Rep. Reuven Carlyle!

Except, perusing his 57 page bill one finds no reference to the tax breaks given to indian tribes. It has been estimated that Christine Gregoire's quid-pro-quo gas-tax deal with tribes will cost taxpayers $621 Million over the next 17 years.

1 of 4

State Auditor Brian Sonntag has underway a comprehensive performance audit of Sound Transit, which is expected to be the principal achievement of his last year in office before retirement.

Nobody should get their hopes up about this performance audit disclosing anything Team Sound Transit doesn’t want disclosed.

The SAO under Brian Sonntag has covered up that government’s failures to treat taxpayers for over a decade. The SAO has consistently turned a blind eye to how that taxing district failed to follow ordinances and its own policies. For example, when “Sound Move” was in effect Sonntag’s office failed to note in its annual accountability audit reports how that taxing district was not complying with the following spending budget mandates spelled out in Appendix B:

“The RTA Financing Plan will provide a budget for each of the five RTA subareas, comprised of the subarea’s projected share of local taxes, bonding capacity and farebox proceeds, and an assumption for federal funding, and related expenditures.”

Those requirements – voter approved legal limits – were disregarded by Sound Transit’s staff after 2001. In annual accountability audits the state auditor is required by statute to examine whether “the ordinances and orders of the local government” are being followed. RCW 43.09.260(5). Despite that legal requirement Sonntag’s office NEVER audited to ensure internal procedures existed to ensure compliance with those revenue spending limits.

2 of 4

The SAO’s previous performance audit reports regarding that government and its activities have been worse than useless. Here’s the one from 2007 relating to aspects of light rail construction:

http://www.sao.wa.gov/auditreports/auditreportfiles/ar1000005.pdf

Here are just two examples of how lousy that report was:

-- On page 22 it says this: “The estimated cost for Link Light Rail is $2.6 billion.” That report ignores completely the tax cost to the public of light rail. Within a month of the release of that report Sound Transit filed a document with the SEC called an “official statement”. That was its disclosure statement needed to sell hundreds of millions of dollars of bonds. Page 4 of it says that light rail’s estimated cost was $4.1 billion, and that the tax cost to the public during the Sound Move construction period would be $6.9 billion.

-- On page 51 it says this:

Sound Transit has had “second-opinion” cost estimates performed for high risk and complex construction packages such as . . . the University Link ($1.5 billion). This approach supports best practices and efforts to mitigate cost overruns.

The year after that audit report came out the University Link budget was amended upward by the board to $1.9 billion.

The SAO just hired the same small group of accountants in Portland to do this new performance audit that produced that useless, misleading 2007 audit report. Think about it.

3 of 4

What the public, state and local legislators, and the press now need is a range of facts and estimates bearing on the ballooning massive local public costs Sound Transit intends to impose.

A story in the Times from sixteen months ago said staff STILL wasn’t ready to disclose the tax hit it intended to deliver to the individuals, families, and our local economy:

A huge question is the long-term effect on taxpayers.

However, financial officer Brian McCartan has yet to recalculate how the recession might push the agency to use more or longer debt financing.

http://seattletimes.nwsource.com/html/localnews/2012980341_soundtransit24m.html

McCartan has this information, he just won’t disclose it. That “more or longer debt financing” is punishing and unnecessary.

There is a muni-bond-related disaster unfolding at Sound Transit. The newest disclosures from it about its plans for long-term bond sales are appalling.

The 2011 Q2 “Asset Liability Management Report” from September last year said that taxing district expected to issue $5.37 billion in new long-term bonds. Then, just three months later, the 2011 Q3 “Asset Liability Management Report” reported Sound Transit now plans on selling $6.8 billion of additional long-term bonds.

That’s news. At some point during those three months that entirely unaccountable taxing district increased its estimate of how much long-term debt it wants to saddle the people of this area with by one and one-half billion dollars. The tax costs for the region required to secure those bonds likely will be at least $85 billion. No peer taxes the people subject to it anywhere near that heavily for buses and trains.

We’ll know when we get the new audit report whether Sonntag will continue to whitewash this unfolding financial disaster.

4 of 4

An Open Letter to Auditor Sonntag:

The SAO is paying the same accountants from Oregon to deliver a performance audit report of Sound Transit that produced that I-900 audit report in 2007. That suggests we can expect another whitewash job.

In the event your office intends to actually shed light on important financial information of use to the public and government officials, the scope of the upcoming report should be delineated carefully. The audit you commission should provide much-needed financial information relating to matters Sound Transit has been keeping from the public:

-- The audit report should set out detailed information about the taxing amounts that government anticipates it would need to secure all the long-term bonds it expects to issue. Those estimates now are a complete mystery outside the silo.

-- At the outset the performance audit report should note there are no taxpayer protection limits applicable to Sound Transit under ST2, such as tax collection limits, tax revenue spending limits, bond selling limits, limits on the extent of tax collections that may be pledged as security in bond sales contracts, or caps of any type when it comes to how much can be spent by that government on debt financing costs, capital costs, operations costs, and payments to other governments. This upcoming report should describe the ways in which that reality presents a huge threat: the unaccountable political appointees running the show for that local government can abuse taxpayers by spending too much, collecting too much tax, pledging too much tax to bonds, obtaining delays, etc.

-- The report should address the causes for the recent bad disclosure from that government’s staff about the increased bond sales projections. Why did staff last quarter raise the anticipated bond sale figure for ST2 from $5.3 billion to $6.8 billion? That stinks, and no reason was provided for that huge upward adjustment.

-- The report also should address why Sound Transit’s financing plan for buses and trains is many, many times more punishing in terms of direct regressive taxes on people than what all the peers are doing. The differences between Sound Transit’s financing plan and how the peers pay for rail transit – mostly federal grants, progressive taxing, little or no new taxing, etc. – should be described.

-- The report from the audit team should address whether disclosures by that government prior to the vote about costs the public would bear if ST2 passed were misleading. An estimate should be provided of what the new tax costs would have been had the CFO’s estimate in the weeks before the 2008 vote were accurate (McCartan said before the vote the new taxing should stop in 2038). That would be a salient point of comparison to the current, much higher projections.

So Auditor Sonntag: are we going to hear in September when this SAO report comes out that the accountants from Portland were NOT told to report on those matters? What is your plan? Maybe you already told those accountants all they needed to do for their six-figure fee is “describe whether current spending plans comply with the lowered tax revenue forecasts”, or something like that. That kind of audit scope would be just another cover-up tactic, such as the one that resulted in that 2007 report.

Hey crossrip, why don't you ask Mr. Brewster to let you write a column? Obviously, you've done a lot of research on the various subjects that you endlessly repeat in all the comments you post, and in this case you've written more words than Mr. Van Dyke! Hardly anyone who writes for this digital rag gets paid (hence the many articles by shills for various causes), but you would have the satisfaction of knowing people could actually search for and find your thoughts.

Seriously.

Hey orino, how you know the offer has not already been made and declined? Thanks though for some critical thinking. Rarer than one would think.

Let's see now, an autonomous public agency with unlimited ability to issue bonds and, because of the low interest rate environment, a brisk demand for tax sheltered public debt. Did we not have an agency like that some time in the past? and what was the result? not good, was it?

Orino says hardly anyone gets paid for writing for Crosscut. That's wildly untrue: nearly everyone gets paid.

the penultimate TVD paragraph makes sense; ST already has forecast low ridership from Link to Federal Way; it would not be competetive for FTA funds; south King County riders need service today, not decades from now; ST has already provided center access ramps at South 317th Street; the capacity of Link would be grossly wasteful and overkill in that market; I-5 will be tolled.

Washington State as Greece...fabulous parallel...and oh so true!

The number of people riding the gravy train is so immense its only going 3 mph and the boiler is about to blow off its bolts!

Vampire Hedge Funds Are Sucking Greece Dry

If Goldman Sachs is a vampire squid, as Matt Taibbi so aptly named it, then hedge funds are like piranhas or sharks, eager to strip the financial carcass to the bone. Check out Taibbi over at Rolling Stone, and Joshua Holland at Alternet.

+++Greece and the US are not alike, at all, and that's really just more lazy thinking.

Read economist Dean Baker, who's faced down reporters and pundits for promulgating this parallel: “Greece's experience has as much to do with the U.S. as a corner lemonade stand does with Google.”

The United States -- biggest national economy in the world. U.S. public debt equaled 61 percent of our annual economic output. Not even close to the historic highs USA hit during World War II and then through the mid-1950s.

Greece -- a bit larger than Maryland's economy. They face a debt equal to 148 percent of its yearly economic activity – 2.5 times the relative debt load of the U.S.

U.S. is a “low-public spending” country. That's 25 percent of our economic output. Greece's public sector equals around 40 percent of its output.

Just get a handle on this -- we'll keep it simple

http://www.alternet.org/economy/154130/the_nitty_gritty_on_how_and_why_greece_will_leave_the_eurozone

http://www.alternet.org/teaparty/151669/no,_we_won't_end_up_like_greece%3A_5_reasons_conservative_fear-mongering_is_totally_wrong/?page=entire

One several-day later comment.

Of course the U.S. is not Greece and my piece nowhere suggests it.
The shaky situation in Greece is threatening to our economy, however, because of its effect on the Euro zone. The zone is holding together (something greatly in the U.S. interest) only because of strenuous work by the European Central Bank, private banks in Europe and the U.S., and the continuing leadership of Germany, which is propping up Greece and other weak Euro-zone partners. Italy, Spain, Portugal, and Ireland also are shaky, though not yet in the category of Greece. U.S. and European banks would take a tremendous hit if any of these countries were to default or if their sovereign debt were severely downgraded. Most readers no doubt understand this.