The Maloof family, which owns the Sacramento Kings, is being excoriated by fans and local politicians for pulling out of a tentative deal to build a new basketball arena.
It's at least possible, however, that the Maloofs are doing Sacramento a favor by killing a project that could have been a financial albatross for taxpayers in the long run.
Christopher Thornberg, a well-known economist hired by the Maloofs to evaluate the complex deal, concluded that the ticket sales and other underlying revenue assumptions of the deal were unrealistically optimistic and in the end, it didn't pencil out.
"The current plan assumes that ticket revenues generated at the new arena will triple in four years from their current level," Thornberg wrote in a subsequent Bee op-ed piece. "This is twice the rate of growth that was seen in ticket sales in the middle of last decade when the massive real estate bubble was in full swing and overheating all aspects of the local economy. … "
There is an unfortunate tendency of those who promote grandiose public projects to understate costs and overstate economic benefits.
And that brings us to what would be the largest state public works project in American history, the much-vaunted bullet train system to link the northern and southern halves of the state.
Its costs have seesawed and its underlying ridership and revenue assumptions are, to put it charitably, suspect.
The latest plan to be released by the California High-Speed Rail Authority assumes that nearly two-thirds of the $68.4 billion construction cost will be covered by federal grants, even though Congress isn't allocating any money for bullet trains these days.
Just about every independent entity that has reviewed the ever-shifting bullet train plan has raised questions about its underlying assumptions. The Legislature's budget analyst, Mac Taylor, has been especially critical, and on Tuesday, his office issued a sharp critique of the CHSRA's latest version, which was unveiled a couple of weeks ago.
"We find that (C)HSRA has not provided sufficient detail and justification to the Legislature regarding its plan to build a high-speed train system," the report said. "Specifically, funding for the project remains highly speculative and important details have not been sorted out. We recommend the Legislature not approve the governor's various budget proposals to provide additional funding for the project."
The new analysis bolsters the reservations that many in the Legislature already harbor, although they are under tremendous political pressure from bullet train advocates, including Gov. Jerry Brown and construction unions, to allocate money for construction.
The need for a bullet train is questionable at best. But if it's to be built, it should pencil out, not be an act of political hubris.
