Media report questions economic forecasts over SANDAG’s Measure A

Media report questions economic forecasts over SANDAG’s Measure A
The San Diego Area of Governments (SANDAG) is under fire after a report from the Voice of San Diego alleges staff knew of inaccurate forecasts concerning Measure A, which was defeated in November. Photo by Steve Puterski

REGION — A recent news media report is questioning the transparency of the San Diego Area of Governments (SANDAG) following the obtaining of staff emails.

The Voice of San Diego first reported that staff at SANDAG withheld economic forecasts regarding Measure A, the failed sales tax measure not approved by county voters in November.

The measure called for a half-cent increase in sales tax, which estimated $18 billion in revenue over 40 years for transportation upgrades throughout the county. According to the online news site, the amount is more like $14 billion.

In addition, the report alleged SANDAG staff admitted withholding information from the board of directors and county supervisors for nearly one year, which overestimated the amount of funds generated by the tax increase.

The board, which is comprised of elected officials from throughout the county, held a retreat on Thursday, according to the SANDAG website.

SANDAG brass, which includes the executive director and chief economist, knew of the incorrect data before the election, according to VOSD.

Kim Kawada, chief deputy of SANDAG, said the VOSD article left out important details and blew email replies out of context. She also said staff would never intentionally mislead the board, SANDAG Chairman Ron Roberts or the public.

“To address the assertion in the article that came that staff knowingly put a wrong number out there, overestimated and hid the fact is absolutely not true,” Kawada stressed. “The data was a little ambitious, but we had no reason to believe at that time it was the wrong number.”

In fact, Kawada said, the issue concerns an error from the output of a separate forecast model. In 2015, SANDAG began updating “complex” forecasting models, she said.

A different group in SANDAG conducted the forecast for Measure A, Kawada added.

David Hicks, communications manager for SANDAG, said the output model in question is separate from the Measure A forecast.

The output model includes population, jobs and housing, and from those numbers forecast taxable retail sales, which is referred to as the Demographic and Economic Forecasting Model (DEFM).

The revenue forecast used for Measure A was a different and separate model, he added.

“We are in the process of updating that model,” Kawada said of the DEFM. “We use it for decades in the future. They weren’t tied directly. Maybe we should have made the connection.

“There was no reason at the time that we believed the numbers coming out of our model were wrong,” she explained. “I think there was an understanding they may have been aggressive or optimistic, but we had no reason to believe at the top the model numbers were wrong.”

In October 2016, the VOSD inquired about the current TransNet forecasts and whether it matched predictions, and how it would impact Measure A. SANDAG then started “delving into the details,” and why the numbers looked high, Kawada said.

By the time those inaccuracies were identified, the November election had passed.

However, the VOSD said SANDAG’s numbers predicted growth by 1.3 percent — double any previous annual projected increase — each year for the next 40 years.

Kawada, though, said growth rates could be higher because of job growth, income, spending equity and national forecasts.

“We had staff who also strongly felt that it was within reason that future numbers could be within that level of growth,” she added. “There was an error in the aggregation of some of the numbers and how the data was put in and aggregated together.”

Andrew Keatts, the VOSD reporter who broke the story, said on KPBS’s Midday show on Tuesday one specific component of the calculations was not supported. He said the income numbers projections were high, calling for people to spend more money than ever.

“They panicked,” he said of SANDAG staff, “and did nothing.”

Keatts said after the staff discovered incorrect numbers, they put together slides to present the inaccurate information before the executive team in late 2015. The board passed the measure based on those figures.

As for the implications, Keatts said it goes back to last the sales tax increase. Measure A was an extension of TransNet, which is battling budget shortfalls.

“That measure had revenue expectations that were unrealistic,” he said. “The numbers were unsupportable even without the recession.”

Roberts, the chairman of the SANDAG board of directors, was unavailable for comment and questions about the situation were referred to SANDAG.

However, he spoke with the VOSD and said, “I wish as chair or even just as a board member, I had been at least made aware of this.”

John Masson, an Escondido councilman who is an alternate city representative on the SANDAG board, said the concerns from the SANDAG staff should have been discussed. In addition, he said the issue reiterates the need for transparency, something the voters demand.

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