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A Reader's Guide to the SANDAG Scandal

The saga involving the San Diego Association of Governments can get convoluted pretty quickly. First, there’s the fact that SANDAG is not too familiar to many people. Then there’s the fact that the scandal centers on some complex stuff, namely economic forecasts and what goes into them. The fundamental issue at hand, though, is not complex: A powerful government agency knowingly misled the public. And that’s worth understanding.

Back in October, Voice of San Diego discovered a big problem involving SANDAG. That problem has mushroomed into a full-blown scandal.

As far as scandals go, however, this one can get hard to understand pretty quickly. First, there’s the fact that SANDAG, unlike the mayor’s office or the City Council, is not too familiar to many people. Then there’s the fact that the scandal centers on some complex stuff, namely economic forecasts and what goes into them.

The fundamental issue at hand, though, is not complex: A powerful government agency knowingly misled the public. And that’s worth understanding.

So here’s an FAQ to get you caught up.

What is SANDAG again?

SANDAG is the San Diego Association of Governments, a regional agency that leads planning and transportation efforts for the region, and conducts research on issues like population growth.

Its leaders are elected officials throughout the county. Though they come from different sides of the aisle and represent disparate places – northern, southern, rural and urban – they counterintuitively make decisions in lockstep, with few disagreements, almost all of the time.

It might be an obscure agency, but it controls a staggering amount of money and its leaders make big decisions that impact every San Diegan – like where new roads and trolley stops will go.

Why is it in the news lately?

In October, Voice of San Diego’s Andrew Keatts uncovered a major problem with SANDAG’s economic forecast – the formula it uses to predict how much money will come in to pay for big projects. That problem at the time had huge implications for an existing sales tax passed by voters more than a decade ago, and a separate sales tax that SANDAG at the time was campaigning for voters to approve.

The existing sales tax is called Transnet, and the money goes to pay for a slate of major transportation projects.

Here’s how Keatts described what the problem means for Transnet:

So far, SANDAG has collected 25 percent less revenue under TransNet than it promised voters on the ballot.

If sales tax revenue grows at the rate it has grown since the end of the recession, TransNet would end up bringing in around $9 billion for transportation projects – or $5 billion less than voters were told.

Since SANDAG used the same formula to come up with the numbers for Measure A, the sales tax measure put before voters in November, Keatts’ revelation meant that the numbers voters were weighing in on could be wrong, too. SANDAG said Measure A would bring in $18 billion to fund a new slate of transportation projects – everything from freeway widenings to a new trolley line. But the error meant it had the potential to bring in far less than that.

On top of the big question mark hanging over the $18 billion numbers, SANDAG did not tell voters that there was also a chance some of the money from Measure A could have gone to backfill the Transnet shortfall.

At the time of the story, SANDAG officials insisted that if Measure A passed, the agency would be able to fulfill the list of projects it promised to voters.

Measure A ultimately failed.

Weeks after voters rejected the measure, SANDAG quietly admitted that our findings were right. In a report to its board members, “staff from the regional planning agency conceded that to finish all the highway expansion, new transit lines and other transportation projects promised in a 2004 sales tax extension, it will need to find as much as $17.5 billion from federal and state sources,” Keatts reported.

That sounds bad. But forecasts have been wrong before, right?

Indeed. No one is 100 percent accurate when it comes to predicting the future. At the time of our first report, several experts said that a problem with the forecast would not necessarily be a scandal or a sign of wrongdoing. But they all added a caveat: SANDAG should have told voters about the problem.

“Given the facts, they should in their periodic disclosures, their continuing disclosures and official public statements, they should be telling this story. They have to come clean on this. It’s very dramatic,” Peter Kiernan, an attorney with Schiff Harden who specializes in public finance and infrastructure, told Keatts.

Kiernan’s assessment underscores the fact that there are two major issues here: The forecasting error itself, and SANDAG’s willingness to be forthright with the public about the error and its implications. The first is understandable; the second, as you’ll see, is unforgivable.

Here’s how Scott Lewis sized up the situation in late December:

This is all excusable. SANDAG officials, led by Executive Director Gary Gallegos, did not steal the money or waste it, as far as we can tell. The agency just made some questionable assumptions about how the economy would perform. …

However, this is now a scandal. Why?

Because if it were not for Andrew Keatts, on our staff, nobody would know about this. This is something SANDAG officials should have disclosed themselves.

Lewis ended with a promise to readers:

We will keep digging to figure out what they knew when they were telling voters how much money they could bring in and how many projects they could do.

Or, they could just tell us.

Either way, this one is not going away.

We did keep digging.

And that’s how Keatts got to his second bombshell: SANDAG knew Measure A would not raise $18 billion more than a year before the November election. And it put that number on the ballot anyway, knowing it would entice voters to say yes. (More than 50 percent of voters did say yes, but tax measures that go toward a specific purpose need two-thirds support in order to pass.)

If Measure A failed, why are we still talking about this?

There are two main reasons.

The first is that SANDAG officials lied to the public, and that major violation of voters’ trust deserves to be aired and addressed.

The second is that this issue is going to come up again, precisely because Measure A failed. SANDAG still wants to build all those projects that Measure A would have funded, and it still needs money to pay for them. SANDAG, or other smaller government agencies, are almost certainly going to have to take another shot at asking voters to spend money to fund those projects.

And now voters, who are already reluctant to part with more money, will go in to that vote knowing SANDAG has been dishonest in the past about how much money a new tax would bring in, and how many projects it could realistically fund.

What’s SANDAG’s explanation?

Well, it’s tried on several.

Back in October, SANDAG downplayed the revenue shortfall, and said it was mostly because of the recession. Several experts told us that didn’t make sense.

And sure enough, the problem largely lay with SANDAG’s forecast – it was predicting that San Diegans would spend far more money on items that are subject to sales tax than they ever have before.

Once Keatts revealed that the agency knew about the forecast error more than a year before the Measure A vote – and put it on the ballot anyway – SANDAG stepped up its efforts to explain itself.

Its primary defense has been this, basically: Yes, we uncovered a major forecasting error. But we didn’t know that the error was related to the Measure A number at all. Therefore, we didn’t purposely deceive voters.

Here’s the thing. They did know the two were connected. SANDAG staffers put together a presentation to agency executives that made the connection crystal clear.

Don’t bonds like Transnet have oversight agencies to make sure everything is on track? Where have they been?

Yes, they do. The watchdog group that oversees Transnet is called the Independent Taxpayer Oversight Committee.

SANDAG made sure the revenue shortfall was as obscure and hard to understand as possible in the documents it disclosed to the committee.

Even so, ITOC officials have basically said the shortfall isn’t their problem. They believe their role is limited solely to making sure the money is being spent on projects SANDAG said it would be spent on. So, ITOC makes sure SANDAG is spending money on roads and trolleys like it told voters instead of, say, building amusement parks. They don’t think that making sure enough money is coming in is their job.

Experts told us there’s no rule limiting their role as strictly as they’re interpreting it.

What TransNet projects are in jeopardy?

It’s hard to say, and we’re still working to understand it better. To some extent, we don’t yet know because it depends. SANDAG uses the money it collects from local taxes to compete against other regions for state and federal funds to pay the full cost of major projects. On the ballot, SANDAG promises to match every local $1 with another $1 from outside San Diego, effectively doubling the money available to build freeways and rail lines.

But in the future, it’ll need to bring in $3.41 for every $1 it raises in local taxes in order to build everything it promised voters back in 2004. Right now, SANDAG expects to bring in $6.3 billion between now and 2048, and it has promised voters some $27.8 billion in projects. It’s relatively certain it’ll bring in money from some predictable federal and state sources – but that leaves a gap of about $17.5 billion it needs to bring in but has no clear idea of where it’ll come from.

It’s likely that new federal or state legislation will make money available that’ll help SANDAG fill some of that $17.5 billion gap. Whatever part of that gap it doesn’t fill represents projects that won’t be built.

Projects that haven’t started yet, then, are most in danger. TransNet Projects that aren’t yet in development include widening I-94; portions of projects that would widen I-5, I-15 and I-805; creating a new high-frequency bus route between San Ysidro and Sorrento Mesa; separating the blue line trolley in South Bay from regular car traffic; and adding a second set of tracks to the Sprinter in North County to accommodate more frequent service.

How can we avoid this happening again?

Like I mentioned up top, the SANDAG board is composed of elected public officials. As we’ve seen over the last couple months at the national level, politicians tend to respond when their constituents become activated and engaged.

Mayor Kevin Faulconer, for example, tends to skip most SANDAG meetings. San Diego City Councilwoman Myrtle Cole is on the board, and Councilwoman Lorie Zapf is an alternate. County Supervisor Ron Roberts is the chairman of the board.

If you live in the city of San Diego, you could let the mayor and other officials who directly represent you know how you feel about what’s been happening, and what you’d like to see them do about it. And here’s the full list of representatives on the SANDAG board for folks across the county who are interested in reaching out to their leaders.

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