BIG DIG OMG

On Tuesday, MassDOT CFO Dana Levenson presented Big Dig cost information to the House Committee on Post Audit and Oversight.

The total cost figure grabbed the headlines — total cost of the Big Dig is $24.3 billion. But that figure has changed little from the cost estimates from four years ago.

There are two key things to consider. First, the state is using the total cost of financing over time to reach the $24.3 billion number.

As an example, if you have a mortgage with $200,000 in principal outstanding and you’ll pay an additional $100,000 in interest over the life of the loan, how would you describe the size of your mortgage? Most people would say $200,000. Using MassDOT’s total cost of borrowing method, you’d say $300,000. Each is accurate, but you need to be careful of your terms.

Next, MassDOT’s current estimate lumps in the financing costs of transit-related Big Dig mitigation projects. This strikes me as distorting — that borrowing built transit assets, not the Big Dig.

Once you back out the Big Dig money, the total project cost is $21 billion, which is less than the $21.98 billion estimate provided by the Globe‘s Sean Murphy in 2008.

Looking more closely at MassDOT’s number, we find that there is $4.6 billion in outstanding Big Dig debt, and we’ll be paying out $2.8 billion in interest on that debt.

Still big and troubling numbers, to be sure, but what we heard on Tuesday is what we already knew.