The city's latest financial plan for the East Kapolei to Ala Moana commuter rail line anticipates a $360 million shortfall in tax collections.

The financial plan, which was revised in August, paints a rosier picture than a May version that showed tax collections coming in about $500 million short. The improvement is based on an expectation that the economy will rebound sooner.

The city provided the new plan to The Advertiser yesterday in response to a Freedom of Information Act request made on Aug. 27.

The latest financial plan also revised the cost of the 20-mile, elevated rail line upward by $190 million to an inflation-adjusted $5.5 billion.

The city expects to rely on increased federal funds — including diverting federal money intended for TheBus — to help make up for the lower-than-anticipated tax revenue and higher costs, according to the financial plan.

City transportation Director Wayne Yoshioka yesterday said the lower revenue forecast and higher project costs contained in the new financial plan represent a "worst-case scenario." The potential for lower construction costs and a stronger than projected rebound in tax collections could eliminate the need to divert federal bus funds to pay for rail, Yoshioka said.

"There's a strong likelihood that construction costs may be lower than we're projecting" in the current financial plan, Yoshioka said. Mayor Mufi Hannemann "has made it very clear we won't compromise the bus system."

What is unclear is "whether we get the money from somewhere else (or) we delete features of the project," Yoshioka added.

The updated plan was sent by the city to the Federal Transit Administration as part of the city's application to begin the preliminary engineering phase of the project. The city hopes to begin construction of the train in December.

Under the updated financial plan, the city now expects transit tax revenues from fiscal 2009 to fiscal 2030 to total $3.52 billion, which is up from $3.32 billion in the May version of the plan. When combined with $174 million in actual transit tax collections in fiscal 2007 and fiscal 2008, the city's total anticipated transit excise tax take rises to about $3.69 billion. That's about $360 million less than the $4.05 billion in transit tax revenues forecast by the city in a draft environmental impact statement in October.

TRANSIT SURCHARGE

A half a percentage point surcharge was added to the general excise tax in Honolulu in January 2007 to fund the rail.

During fiscal year 2009, which ended June 30, transit tax collections fell short of the October forecast by $27.1 million. In the August financial plan, the city cut its forecast for 2009 tax collections and, as a result, collections were $12 million more than the new forecast.

The updated report said the anticipated project costs will rise because of higher finance and vehicle costs.

It said the anticipated reduction in excise tax revenues collections will be offset by increasing the federal contribution to the project from $1.4 billion to $1.55 billion and by diverting $305 million in federal funds for bus acquisition and preventative maintenance to pay for the train, under city plans.

Both the May and August versions of the financial plan outline several other options the city could pursue to make up for the lost revenue, including asking for more money from the state, the federal government, the military, private developers and the Honolulu International Airport.

BUS GETS 'ROBBED'

City officials have repeatedly stressed that property taxes will not be used to help pay for the train.

However, that could happen indirectly if federal bus money is diverted to pay for the train, said City Council member Charles Djou.

"Now it seems like they're robbing Peter to pay Paul — that the bus is going to get robbed to finance the rail system," he said. "If you keep on taking money from the bus, and you want to keep your bus operations at current levels, you're going to have to find the money somewhere else. That's more likely to be real property taxes ... or you have to raise the general excise tax again."

City Council Chair Todd Apo said the council will need to hold a detailed discussion before approving of material changes to the city's rail financial plan, including diverting money from the bus to rail.

Apo and Djou said they have yet to receive the city's latest financial plan. Both said the city could be more open about the rail project's finances.

"We all agree there needs to be transparency in this project, especially in the financial aspects of it and the administration needs to commit to an understandable set of milestone points where we're going to have that information available to the public," Djou said. "I don't expect them to proactively send us every little bit (of information), but we need to know what those big points are where they are going to send it to us.

"We all need to identify that better for ourselves and the public," Apo said.