The Coming Rail Disaster
The breakdown at the Hawaii State Legislature over funding for the Honolulu Rapid Transit has left Mayor Caldwell scrambling for funds. The Legislature has split over raising the Hotel Room Tax or extending the half percent Oahu Excise Tax and in the end, chose neither.
Honolulu County does not have the funds for an open ended transit project which has gone from 6 billion to 10 billion and if it follows the same cost trajectory once it hits the Dillingham to Ala Moana corridor its cost may well continue to spiral out of control. Other municipalities with greater assets then Honolulu have found themselves in serious financial straits having undertaken infrastructure projects without the necessary cost controls and financial accountability.
Financial accountability is lacking where political accountability is absent.
There are some significant differences between the economic worldview of the Democrat vs Republican on many major issues.
One such difference is the average Republican leader seems to place more trust in the free market system then the average Democrat leader.
This translates into a greater willingness to seek out 3-P (Public-Private-Partnership) projects which offer less burden on the taxpayer and greater accountability for a projects cost and completion. This is helped along by the inclusion of private capital being a strong mechanism for constraining cost while seeking to open the project for public use as quickly as can be reasonable accomplished.
The City of Honolulu is guaranteed a shaky ride for its rail project. Avoiding a complete shut down via lack of funds (or bankruptcy) is a real possibility. The fact that the reported low ball cost for operating the rail system is one hundred million a year ( or in other words all of Oahu’s residence spending at least a hundred dollars a year riding the rail system to reach a break even point) doesn’t help in making the rail system viable at any cost.
In fact bankruptcy may be the best alternative if is too late for a 3-P approach. Allowing the assets of the rail system to be bought up at a fire sale price by a private developer with an economic plan to put some if not all of the project into operation may be the only way to avoid having the elevated guide-way become an enormous edifice to government overreach