The Honolulu Authority for Rapid Transportation has advanced its fiscal year 2026 operating and capital budgets to Mayor Rick Blangiardi and the City Council for possible adoption in 2025.

HART’s combined budgets, which total over $968.3 million and would take effect July 1, show marked increases to debt service on the project’s loans as well as increased labor costs for the nearly $10 billion Skyline construction.

Rail officials indicated that due to the recently awarded $1.66 billion City Center Guideway and Stations, or CCGS, contract meant to take the rail line to Kakaako by 2031, the numbers within HART’s latest budget could change substantially before official review and approval by June.

Still, the HART board of directors’ finance committee voted Friday to submit its spending plans to the mayor and the Council ahead of a Dec. 1 deadline, pursuant to the City Charter.

According to HART’s budget information, 2025’s total operating budget will rise to $174.7 million — an increase of $36.4 million, or 26.3%, over the rail agency’s current $138.3 million spending plan.

Of that amount, $169.7 million — or 97% — is composed of debt service expenditures.

That includes $129 million in principal payments on outstanding general obligation bonds — an increase of $40.8 million over the current fiscal year, reports indicate.

But the agency notes that $40.3 million in interest payments on debt equates to a $4.6 million decrease compared with the current fiscal year.

Conversely, total labor costs are budgeted at $1.5 million — a $368,153 increase, or 32.4% higher than the current year.

HART’s main funding sources — local taxes and federal funding — total $1.2 billion for fiscal year 2026, budget plans indicate.

2025’s federal funding source totals $125 million, or about 10% of the project’s funding budget, compared with nearly $491.3 million, or 40%, derived from local taxes, budget reports state.

A $10 million city subsidy is among other funding sources comprising the remaining amounts.

Rail construction money is largely gleaned from the state’s general excise tax, which is projected to be over $348.58 million in 2025; transient accommodation tax, estimated at more than $90 million; as well as the city’s own TAT at nearly $52.6 million, among other sources, according to HART.

The proposed operating and capital budgets will fund 72 full-time equivalent positions, though 40 actual people were employed at the rail agency as of Sept. 30, HART reports state.

The operating budget funds 6.7 FTEs, while the capital budget pays for the remainder, or 65.3 positions, HART states.

The rail agency is authorized to have a total of 98 positions.

“The operating budget for (personnel) expenses is $1 million in HART,” and $439,471 for the board of directors’ personnel expenses, said HART Deputy Director of Budget and Finance Richard Oshiro during the committee meeting. “And on the capital side, in total, it’s $15.1 million.”

HART also proposes a $793.6 million capital budget for next fiscal year above the current $574 million — a nearly 38.3% increase.

The capital budget includes future contract awards for Skyline’s Pearl Highlands Transit Center as well as an H-2 freeway access ramp.

It also continues projects begun in prior years.

Those include the phased construction under the CCGS contract, which encompasses the design and construction of six rail stations and three miles of elevated rail guideway beginning east of the Middle Street Transit Center station.

On Aug. 15, HART awarded the $1.66 billion CCGS contract to Los Angeles-­based Tutor Perini Corp. to design and build Skyline’s last 3-mile segment.

However, HART staff said that due to the size of that contract — about $360 million above original estimates — certain rail-related projects might need to be temporarily deferred.

At Friday’s meeting Finance Committee Chair Robert Yu said HART’s budget package to the mayor and Council required a written “disclosure.”

He argued that due to the sizable cost of the CCGS project, and because the project’s official “notice to proceed” was issued in October, some valuable information was not factored into HART’s latest budgets.

“So I’m hesitant to submit something to the city administration and to the City Council, documents that we know the numbers aren’t accurate anymore,” Yu said. “Our request is to disclose that the numbers may change and that it could change significantly based on the pricing of CCGS.”

To that, HART Deputy Executive Director and CFO Rick Keene said the rail agency’s budget numbers would likely not change.

“But if we got to January, February, March and our forecast was showing something significantly different than this, then we would change it before we went to City Council,” Keene said.

Yu requested the finance committee submit HART’s budgets to the city and Council “on the condition that the following language be included in the transmittal letter.”

“And the language is: ‘The fiscal year 2026 operating and capital budget excludes updated pricing for (CCGS) and its impact on the overall project and the six-year capital plan. We anticipate having this information updated by February 2025,’” he said.

The committee adopted the budget submission, with the accompanying disclaimer, without opposition.