New sales tax forecasting from Sound Transit has indicated that their $17.8 billion transit expansion project passed by voters last fall now faces a $2.1 billion funding gap because of the deepening recession. Sound Transit is funded by a 0.4% sales tax (increaseing to 0.9% on April 1st) and an MVET on car purchases. Consumer spending and car purchases fell significantly as America entered into its worst recession in recent memory.
Sound Transit says that it has been conservative in its budgeting and may be able to make up some money with a variety of tools “including cost and scope control, taking advantage of the lower borrowing costs, and a more positive bid environment for our construction projects.” Earlier this year a contract was awarded for light rail to the U District that fell 34% below ST’s estimates. The poor economy has also dampened the effects of inflation that had been built into ST cost estimates.
Sound Transit is not currently planning on any changes to the construction plans but awknowledged that if revenues continue to fall and the recession deepens they may have to “also look at budget reductions, schedule adjustments, and increased bonding.” Pete Rogness, an ST staff member briefing the Sound Transit Board Finance Committee, said that delaying construction or implementation of some of the projects was “very much a last resort.”
It’s a shame to see something we all worked so hard to pass immediately be affected by the recession, but it’s also not surprising. Every level of government that depends on taxing revenues is seeing major drops in their collections. The ST2 plan creates about 69,000 jobs across all sectors — which is reason enough to keep things on track. Thus, an increased federal role in transportation spending would be even more useful in an environment like this.