HONOLULU -- Honolulu Mayor Mufi Hannemann Tuesday has signed into law a bill that raises the state's general excise tax by 0.5 percent. The money will be used to pay for mass transit on Oahu.

Council members voted 7-2 in favor of the tax increase on Aug. 10. Council Members Charles Djou and Barbara Marshall voted against the measure.

The mayor said the time to debate the tax hike is over. Now, it's time to select the best transit system, he said.

"And yes, it will cost something because everything in life costs something. Let's not forget, we have one of the best bus systems in America because we subsidize it," Hannemann said. "And that is a fundamental issue throughout America: we subsidize public transportation."

By the end of August, the city expects to select a consultant to do the alternatives analysis to determine the kind of system to build. The mayor is pushing for a rail system connecting to buses and a commuter ferry.

Opponents are adamantly opposed to the rail proposal.

"People will not give up their cars so easily and we do have a bus system. And i think we should utilize the bus system more,"

The mayor said there will be public meetings for community members to start weighing in on what kind of transit system they want by the end of the year.

The general excise tax on Oahu will go from 4 percent to 4.5 percent starting on Jan. 1, 2007. It's expected to bring in $150 million in additional tax revenue.

Mathematically, the hike turns out to be a 12.5 percent increase. That could mean up to $450 more in taxes a year for each family.

Hannemann's administration plans next to conduct a study to determine what transit system is preferred.

The mayor and lawmakers had to negotiate with Gov. Linda Lingle to have her sign the bill that would give counties the power to raise the GET by 0.5 percent. She had threatened to veto the measure.

Lingle's concerns centered on how a one-half percentage point surcharge on the state's general excise tax would be collected. She wanted the counties, not the state, to be the ones that collect the tax.

Lawmakers promised the governor that they would introduce a bill during next year's session that will satisfy the governor's concerns over the bill.