Honolulu will eliminate pay raises for some city workers, cut pay by about 5 percent for the mayor and his Cabinet and possibly scuttle its costly ferry boat service in an effort to fill a $50 million budget shortfall in the fiscal year starting in July.

Mayor Mufi Hannemann discussed those and other city initiatives during his fifth State of the City address yesterday at the Mission Memorial Auditorium near Honolulu Hale. The mayor stuck to a theme of cooperation and shared sacrifice as a means of coping with difficult economic times.

Lower visitor arrivals, declining real estate values and rising unemployment are taking a toll on the local economy. For the city, that translates into flattening property, fuel and hotel tax income coupled with rising costs for emergency services, fuel and debt.

"What it will take to work ourselves out of this situation is collaboration, creativity and a commitment to a cause, and that cause is improving the lives of our people," Hannemann told an invited crowd that included U.S. Sens. Daniel K. Inouye and Dan Akaka, plus local government, military, business and educational leaders.

Among those making sacrifices are city union employees and their managers who won't be getting pay raises in the coming year. The mayor and his appointed Cabinet will work without pay one day a month, which equates to a 5 percent pay cut.

On the topic of public transit Hannemann provided an update on city efforts to build a $5.4 billion elevated commuter rail from East Kapolei to Ala Moana. The city hopes to begin construction in December, contingent on federal approval, and launch services between 2013 and 2019.

Hannemann called efforts by some in the state Legislature to defer the transit tax to plug its own budget holes "illegal."

"The train is here and it's moving ahead," he said, promising the project would result in "choke" jobs beginning this year.

Hannemann also said TheBoat ferry commuter service has suffered from maintenance and ridership setbacks. He said he's ordered an assessment due in April that will help decide whether to continue the $5 million a year city-sponsored service.

Among other Hannemann initiatives:

• Exploring merging fire and emergency services into one agency better able take advantage of economies of scale.

• Inviting the state to collocate state services with city services on 16 acres of Kapolei land donated by Kapolei Property Development.

• Considering demolishing the Waikiki Natatorium pool, but reconstructing the facade at the Veterans Memorial Aquatic Center.

Hannemann also said the city has budgeted $302 million to expand the city's H-power plant, which converts garbage to power, in Kapolei.

That's up from a preliminary cost estimate for the expansion of about $100 million. However, the new figure likely includes the total cost of the project including the recent purchase of the H-power facility and a long-term service agreement with its current private-sector operator.

The city has said the cost of expanding the plant is significantly less than the cost of building a new facility.

The city plans to install a third combustion unit that would expand the facility's current processing capacity from 610,000 tons to 910,000 tons a year.

City Council Chairman Todd Apo, who supports the expansion, said he wasn't aware that the costs of adding the third H-power boiler had risen so high.

"That is obviously a number that there's going to be a lot of discussion on," he said.