Wednesday, March 08, 2006

Jeff Fraser has an interesting post on Major Moves over on his blog

Please check it out at:
<http://fortwayneinsight.blogspot.com/>

I left a long winded comment over there. I do not know enough about Major Moves to have a real strong opinion on it.

I can tell you this; INDOT is flat out lying that Major Moves will create 130,000 new jobs. This is a bald faced lie and someone should be fired over it. My current idea is the Republicans who are mindlessly trumpeting this lie all over Indiana.

Go over to jeff's blog and read my comment. Make sure you have a calculator out so you can follow my math...

6 comments:

John Good said...

Amazing. Jeff's head is WAY up his ass. Is there a deprogramming center that we can send this kid to? He obviously has been and still is being brainwashed. A young mind is a terrible thing to waste.

William Larsen said...

Mike, you beat me to the punch. When I saw the 130,000 jobs, the first thing I did was a back of the envelope check. It does not wash. In industry the average cost to hire one individual is over $100,000.

The second problem is $4 Billion over 75 years. If we use the gradient formula we can calculate the today's dollar evenly over 75 years.

$104,201,747,359 is the amount that can be realistically spent every year of the $4 Billion based on 6% cost of money and 4% wage growth. If the state spends more than this amount in any given year, then some time within 75 years, there will be zero to spend thereafter. In simple terms we took future dollars and spent them now. This is theft.

$104,201,747,359 paying $50,000 to a worker would produce 2,084 jobs. If you wanted to create 130,000 new jobs and keep them every year for 75 years, then the most they could be paid is $801.55 per year.

One of the largest mistakes school districts make in budgeting is they fail to match a bond term for new schools with the life span of the school with no upgrades. By setting the term greater than the life span with no upgrades or maintenance, you end up with the condition of having multiple bonds being used to pay for something that no longer exists plus a new bond to cover the new project.

It would be like buying a car and paying for it over 25 years. You replace the car in year ten, with a new car and a new note, but now have fifteen years to pay yet on the first car and a new loan for the second car. After another ten years the second car is shot and you buy a third car. You have five years left on the first car, fifteen years left on the second car and twenty-five years left on the third car.

75 years is too long. The life span of a road without renovation is less than ten years easily. Therefore, the term should be no more than ten years and most likely closer to six years.

William Larsen said...

Sorry for a typo in my previous comment.

$104,201,747,359 should be $104,201,747.359

$104 million instead of $104 Billion. That would have been a great deal.

Doug said...

I don't know about the jobs component of the deal, but as a policy matter, I think it's wrong to tax northern Indiana motorists to pay for southern Indiana road construction.

I think the state's roads should be paid out of taxes paid generally by the public.

Andrew Kaduk said...

Sorry, Doug. The whole point of Government is to re-distribute the 'wealth' it collects to best serve everyone in their geographical area of influence...that's just the way it goes. Otherwise, towns like Garrett, Corunna, Ligonier, etc would not have enough money to even plow their own streets in the winter. They have to rely on some bigger surrounding cities and taxpayers from all over the state to fund projects that promote the general welfare of all Indiana residents.

Anonymous said...

Best regards from NY!
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