HONOLULU - The recovery plan for the city's $8 billion train doesn't mention the hotel tax as a new funding source, even though that's what state lawmakers  tentatively decided on Friday.

HART's CEO Krishniah Murthy said the staff didn't know the final decision at the time, it filed the plan and will be amending its report.
   
Murthy assures taxpayers will see tighter spending controls.

"The main thing is it going to be easier to track from here going forward. It should be. The reporting system should be more transparent and more straightforward," Murthy said.

Members of the Honolulu City Council said Monday the bill state lawmakers are poised to vote on to complete rail, maybe on shakey legal ground.
   
It's asking city and state lawyers to look closer at a section in the deal that has the state overstepping its powers. 

"The provision in the  bill that would limit the city's ability to renovate the Blaisdell Center infringes on home rule by the city and county of Honolulu  and therefore, is unconstitutional," Rep. Ron Menor, Council Chair said.

The council's budget chair says the bill with its restrictions throws off the city's budget by 34 million and will be a double whammy for Oahu residents who will be taxed on both ends.

"We are looking at a possible $2 billion shortfall. The legislature is putting us in a bind if we have to make up that shortfall with property taxes," Joey Manahan, Budget Chair said.

Others question whether its poor public policy to enact a tax on the visitor industry without getting input from those affected.

"You would certainly have the stake holders know about and have comment on it and get public input and this didn't happen so that's why a lot of people are outraged about it," Tom Yamachika with the Hawaii Tax Foundation said.

The proposed 2.75 percent hotel room tax hike is seen by some as an attack on hotels with an unintended consequince of driving tourists into illegal short term rentals.

"There is a clear cause and effect here. If you raise the rates on the good men and women in the hotel industry who are paying their fair share you are incentivising the illegal  activity in our neighborhoods," Kekoa McClennan, American Hotel and Lodging Assn said.

The group is calling on lawmakers to amend the bill on the floor tomorrow and return to the city's original request of extending the tax for ten years to complete the project.

But it's a gamble since the House only supports a two year hike and the Senate seven years.

It's unclear whether the problematic language in the bill can be severed.

Any floor amendment tomorrow could push a final vote Thursday.