Hawaii state lawmakers are planning a special session to figure out how to fund Honolulu’s rail project.

The city is struggling with a $1.4 billion shortfall for the nearly $10 billion project.

Senate President Ronald Kouchi (Kauai, Niihau) and House Speaker Scott Saiki (McCully, Kakaako, Kaheka, Downtown) sent a joint letter to Matthew Welbes, executive director of the Federal Transit Administration, promising a special session in July or August.

Although no specific dates have been set and no rail funding mechanism has been agreed upon, lawmakers reiterated their “collective resolve to craft a legislative solution that will provide the City and County of Honolulu with a dedicated revenue stream that, along with the Full Funding Grant Agreement, will enable the City and County of Honolulu to complete construction of the Minimum Operating Segment (MOS) of the Honolulu Rail Transit Project (HRTP).”Click here to read the letter in its entirety.

Honolulu Mayor Kirk Caldwell says a special session is imperative to free up nearly $800 million in federal money.

“I’m pleased the Hawaii State Legislature will be going into special session this summer to address rail funding,” Caldwell said in a statement Monday. “I want to thank Senate President Ron Kouchi and House Speaker Scott Saiki for their leadership and their intent to provide the City and County of Honolulu with a dedicated revenue stream to complete the system to Ala Moana Center. The city and HART have provided lawmakers with the most current financial estimates about the project, and stand ready to assist them in their deliberations.”

So will there be a tax increase, or will there be a new proposal on the table?

Saiki says leaders from both sides agree the issue of funding rail needs to be a priority. From now until the special session starts, Saiki says the city needs to give them hard numbers on how much rail is going to cost.

Saiki said about two weeks ago, the Honolulu Authority for Rapid Transportation reported a shortfall of $1.38 billion between now and 2024.

“How do you make up for that? Do you increase the GET again between now and 2024, or do you find another funding source?” said Saiki. “After the GET, the hotel room tax is a big source of potential revenue, so it’s something that would have to be seriously considered in special session.”

Here is a breakdown of how much the rail costs now.

HART says the budget is projected at $8.165 billion before financing costs, while projected resources to Dec. 31, 2027 are approximately $6.8 billion.

The difference: $1.365 billion.

Saiki’s latest number he received from HART is $1.384 billion — that’s $19 million more.

Financing costs are up to $1.8 billion, which would make the total cost of the rail project about $10 billion.Click here to view HART’s recovery plan as submitted to the FTA.

Saiki said a new proposal is being negotiated between the House and Senate. A starting-off point would be raising the hotel tax or extending the hike of the general excise tax to pay for rail.

Saiki said during this past session, the issue got really emotional and lawmakers ran out of time.

“That’s why when we ended session, we said that we needed to have a cooling-off period with all of the parties inside and outside of this building before we took it up again,” Saiki said. “The mayor needs to explain how the 10-year extension will address the shortfall that we will see between now and the year 2024. He has not done that yet.”

John Hart, political analyst at Hawaii Pacific University, says the special session could be different now that Sen. Donovan Dela Cruz is chair of the Ways and Means Committee.

“There is new leadership now in the Senate that has a different perspective on this,” he said. “They were on city council, but at the end of the day, we will just have to see.”

With an election year coming up, all eyes will be on representatives running for office.

“I think all the legislators are going to take this into consideration when they decide what to do, and maybe it’s okay to consider what the voters want,” said Hart.

Saiki says he and Kouchi sent the letter to support Hawaii’s congressional delegation, which is also working with the federal government on rail’s funding.

He has not heard back from Welbes.

Taxpayers would be on the hook for a special session that would require neighbor-island legislators to return to Oahu. The session has to last a minimum of five days.

According to the Hawaii House of Representatives, each legislator receives a per diem of $225 per day.

For 16 House members and eight Senate members, that amounts to $27,000 for a five-day session, and each additional overnight would add $5,400.

The cost does not include airfare, which is already paid for, or additional staffing, which officials say is not necessary for a special session.U.S. Rep. Colleen Hanabusa:

“I want to personally commend President Kouchi and Speaker Saiki, along with Senate Ways and Means Chair Donovan Dela Cruz and House Finance Chair Sylvia Luke, for their willingness to continue working towards a solution that balances the financial burden to be shouldered by the people of the City and County of Honolulu (City) while enabling the City and the Honolulu Authority for Rapid Transportation (HART) to meet their obligations under the Full Funding Grant Agreement (FFGA).

“I know Sylvia Luke, and others, worked very hard last session to craft such legislation and I am sure that Donovan Dela Cruz’s historical knowledge of the rail project from his days on the Honolulu City Council will be helpful during this special session.”

U.S. Sen. Brian Schatz:

“It is a highly encouraging sign that the leaders of the Hawaii State Legislature have assured the Federal Transit Administration that a special session will soon be convened. It is important that state and local governments continue to work together to ensure funding obligations under the full funding agreement will be met so that work on rail will be completed as agreed. I will continue my efforts to ensure that FTA understands our commitment to this critical project.”

Honolulu City Council chair Ron Menor:

“We are encouraged by the State Legislature’s intention to hold a special session to develop a funding plan for the Honolulu Rail Transit project while assuring our partners at the Federal Transit Administration that we are working together to meet the requirements outlined by the Full Funding Grant Agreement. The City Council recently approved up to $350 million in new bond financing for the project but we need more help. Our members will continue to work with our colleagues across the street to come up with an agreement that is acceptable to a majority of the project’s stakeholders and the community.”