The cost to build Ho­no­lulu’s rail transit system has decreased to $5.3 billion from $5.5 billion, according to the latest draft of the city’s financial plan, released yesterday.

The financial plan will be sent to the Federal Transit Administration for review. After that review, the project can enter a final design phase. The new version is the first update of the financial plan since August 2009.

The $5.3 billion price tag includes finance charges, adjustments for inflation and a contingency fund of $865 million, dropped from about $1 billion since the last financial plan.

The financial plan still includes the much-criticized possibility of using FTA Section 5307 Formula Funds, which are for transportation-related planning, and in Ho­no­lulu are typically used to help operate TheBus.In the 2009 plan, the city stated that $300 million was available for the project from fiscal 2011 through 2019. In the latest plan, the city plans to use $244 million from fiscal 2013 through 2019.

Mayor Peter Carlisle said in February that TheBus "cannot in any shape, fashion or form be compromised and we’re going to stick to that."

Transportation Services Director Wayne Yoshioka did not return a call for comment.

New to this financial plan is a scenario that assumes the city will not use 5307 funding for the rail project.

"The city could mitigate this revenue reduction partially by issuing more (general obligation) bonds backed by the (general excise tax) surcharge revenues during the construction period," the plan states. "However, after fully leveraging the GET surcharge revenue stream, a funding shortfall of $230 million would still exist."

The plan proposes that the city would extend the 0.5 percent surcharge through September 2023.

Another alternative would be to arrange lease financing for rail vehicles. The city would pledge a smaller portion of the federal money during the construction period to make the lease payments, "thereby allowing a larger portion to be utilized for bus-related capital expenditures from fiscal 2013 to fiscal 2019."

The city might also extend the 0.5 percent GE surcharge, set to expire in 2022, if there are cost overruns or if the surcharge brings in less revenue than expected.

FTA Administrator Peter Rogoff said last month, "The issue of whether they’ll use federal bus funding, when we see proposals like that we evaluate whether maintaining the very important bus service is viable into the future."