The $3.5 billion deficit for the city’s troubled rail project could turn out to be $2 billion and perhaps even as low as $1.5 billion, the chairwoman of the rail board told the Honolulu Star-Advertiser’s Spotlight Hawaii livestream program today.

The initial deficit was based on conservative estimates in March after Lori Kahikina, the rail project’s interim CEO and executive director, took over this year, said Colleen Hanabusa, chairwoman of the board of the Honolulu Authority for Rapid Transportation.

“It looks to me right now …. that they’ve gone from 3.5 (billion dollars) to at least 2 billion,” Hanabusa told Spotlight Hawaii. “So it’s a reduction of $1.5 billion from March to now. …. It looks like it may even be reduced further by an additional at least 500 — potentially $500 million. … It’s all based on assumptions, snapshots in time and what we basically believe the amount of income will be that’s coming in.”

Kahikina is expected to provide a financial update to the City Council’s Budget Committee today, Hanabusa said.

The Council is debating whether to create a new county transient accommodations tax of up to 3% aimed at tourists and the HART board has requested an unspecified share of the new tax.

The rail project is currently budgeted at $12.499 billion to run a system comprised of 20 trains along a 20.2-mile, 21-station route from East Kapolei to the interior of Ala Moana Center, Hawaii’s largest transit hub.

Hanabusa said there is enough money to get through Middle Street but the challenge remains of how to fund construction for the remaining four miles to Ala Moana.

Hanabusa also said that Kahikina is in talks with the HART board to make Kahikina the permanent CEO and executive director. Her predecessor, Andrew Robbins, was the city’s highest-paid employee.

Hanabusa, a former Congresswoman and gubernatorial candidate, said she will not run for lieutenant governor next year but did not rule out another bid for governor.