Crappy reporting explained:

But both of those numbers, which add up to $18 billion, are in so-called 2006 dollars, meaning that they don’t allow for inflation over the decades it will take to complete the work.

And those calculations cover only the cost of construction, not interest payments on money borrowed for the projects, administrative expenses or other outlays (including, for Sound Transit, the cost of operating and maintaining its system).

Considering the effects of inflation at the various times the money will be paid out, the road agency estimates that it will spend $10 billion on actual construction and the transit agency $18 billion. When both inflation and the other costs are factored in — including interest charges until the last of the 30-year Sound Transit construction loans are repaid in 2057 — the sums rise to $16 billion for RTID and $31 billion for Sound Transit. That’s a grand total of $47 billion — the figure the Seattle P-I uses in its articles.

I know I feel like I’m beating a dead horse here, but we don’t know inflation with an accuracy over 50 year periods! The number makes no sense because three years of no inflation could shrink the end number by 20%, and three years of massive inflation could raise it by 50%. We don’t know inflation.

2 Replies to “How much will it cost?”

  1. To say it another way: Numbers in future-value dollars make no sense to people with present-value paychecks. Just because a $1 candy bar will cost $2 in 20 years doesn’t make it a $2 candy bar.

    The PI really needs to sit down and have a long conversation with an economist.

    -Matt the Engineer

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