Public transit fares on Oahu soon might go up for some riders due to a stated shortfall of $40 million.

On Tuesday the Honolulu Rate Commission heard from the city Department of Transportation Services on proposed transit fare changes for fiscal year 2026, which begins July 1, affecting riders of Skyline, TheBus and TheHandi-Van.

The rate proposal does not include increases for HOLO card riders in the adult, youth and senior categories or the annual pass for low-income TheBus riders, according to DTS.

It also provides a $10 decrease in monthly pass rates for Hawaii residents in the senior, Medicare, disabled and low-income categories.

Proposed increases in pass rates include a $10 and $5 increase in monthly pass rates for adults and youths, respectively, and a $110 increase for the adult annual pass, DTS said.

To justify the increases, DTS noted that operating and maintenance costs have risen across its multimodal system, including TheBus, TheHandi-Van and Skyline.

And transit fares, according to the city, have not been raised since 2022.

At Tuesday’s meeting, DTS Director Roger Morton said, “I can start off by saying it’s usually not a popular thing to raise fares or charges or fees for any government service.”

“Our costs increase the same as everybody else’s costs, and we’ve tried to put together a proposal that is a balanced proposal, that looks both at the amount that taxpayers pay for public transportation as well as the amount that riders pay,” he added.

Overall, he said the proposed increase DTS seeks would generate about $4.4 million in additional revenue for the system.

“And that would be an increase from the current level of about $48.3 million in current revenue,” Morton said.

He noted that current annual costs to run the city’s buses are $244.8 million; for TheHandi-Van, $53 million; and for Skyline, about $76 million.

“So you can see that the riders’ share is a small percentage of the cost of it,” he said.

As far as a proposed $10 decrease in monthly pass rates for seniors and low-income categories, Morton said the current rate for a monthly senior pass is $20 and the annual rate is $45.

“And there’s a disbalance … between what the monthly cost is and what the annual cost is,” he said. “A monthly cost if you bought a monthly pass for 12 months would be $240 versus $45 for just buying the annual pass.”

“So it’s not a surprise in terms of ridership for seniors; they have about 7.5 million riders per year for seniors,” he added.

Morton said, “There is no intent to eliminate the annual senior fare.” However, he said DTS is proposing the senior fare increase nominally by $5 per year — to $50 from $45 in the first year.

He said the proposed fare changes also would “simplify a somewhat complicated fare structure.”

Morton added that future rate structures for public transit may be reduced to three rate structures: a whole fare, a youth fare and a reduced fare.

“That would just make it easier for our bus operators,” he said.

Other changes to the city’s public transit fare system might include going cashless.

“Last year we generated $11 million in cash revenue that was only accepted on the buses,” Morton said. “Last year it cost us more than $4 million simply to process the money.”

He added a long-term goal — one that extends five to 10 years into the future — “would be eliminating the handling of cash … because we could get to the point where cash will cost us more to handle it than we would actually get in terms of revenue,” he said.

However, Morton said, “Eliminating cash is typically an equity issue.”

“People in many cities don’t have the cash to come up with a regular pass,” he said. “In Honolulu we have seen fares for low income, for people that are seniors, fares for people with disabilities … exceptionally low, but we require a HOLO card in order to access that particular fare.”

Similarly, he noted that DTS is looking to implement a 25-cent cash surcharge. In terms of bus fares, Morton said the goal is to make riding the bus more like riding an airplane.

“You don’t pay when you get on a plane; you’ve already got your fare accounted for,” Morton said. “And that’s the purpose for that 25-cent surcharge,” adding that riders using HOLO cards or similar cards would not have that surcharge applied.

To that topic, Commissioner Gary Gill wanted more information about cashless systems used by transit systems in other jurisdictions, “and whether we have any data nationwide about who uses cash instead of a card.”

The public also testified on the proposed rate changes.

Among them, Donald Sakamoto, representing Citizens for a Fare Day Ride, said he had issues with a surcharge for cash use.

He noted when the DTS system crashed during a crippling cyberattack in June, it affected the cashless HOLO card.

“If something happened to our system, how would you get payments?” Sakamoto asked. “I have reservations about going fully digital due to things going wrong with our electronics.”

Bryan Mick, with the state’s Disability and Communication Access Board, or DCAB, said issues over going cashless have impacted area parking lots in town that serve the senior and disabled communities.

“We recently had a similar issue brought to DCAB; this was at a private parking lot only accepting payment via a smartphone,” Mick said, noting that the parking lot was a medical building. “The person that contacted us ended up contacting the governor’s office and several elected officials.”

Alika Valdez said he all was for fare hikes on public transit but wanted Honolulu to have a much cleaner city bus fleet. “That will attract more riders,” he added.

Still, Valdez said many people didn’t have “the resources” for additional bus fare.

DreanaLee Kalili, the commission chair, said the panel’s purpose in holding the meeting was to collect public comment over the proposed rate increases.

The public-comment period will run through January, she added.

The commission will then submit a formal recommendation to the Honolulu City Council and the city administration in March over potential fare changes to public transit, she said.

After the meeting, DTS spokesperson Travis Ota told the Honolulu Star-­Advertiser that “there is no fixed deadline” to implement the newly proposed fares.

“However, the fare adjustments proposed will be used to offset the estimated $40 million shortfall for multi-modal operations — TheBus, Skyline, Handi-Van — anticipated in fiscal year 2026, which begins July 1, 2025,” Ota said. “In order to meet that deadline, the Rate Commission has initiated dialogue with the public to receive their feedback in formulating fare policy recommendations.”

Per the Honolulu City Charter, recommendations for fare changes are made to the mayor through the director of DTS. The mayor will transmit the recommendations to the Council, with or without amendments.

After receiving the recommendations from the mayor, the Council will fix and adjust reasonable fares, fees, rates, tolls and other charges for public transit so that the revenue derived will support the operations and maintenance of the city’s public transit system, the Charter indicates.

In setting fares, fees, rates, tolls and other charges, the Council also may consider factors such as transportation equity, accessibility, sustainability, availability and effect on ridership, the Charter states.