The council convened in special session this morning and heard about two dozen bus riders, bus drivers and others blame the city for losing revenue with its system of bus passes.

Outside city hall, some members of Local 5 of the Hotel Employees & Restaurant Employees Union picketed to show support for bus drivers and accused the city of causing the impending strike.

Representatives of O'ahu Transit Service and the Hawai'i Teamsters and Allied Workers 996 were to resume contract talks at 1:30 p.m. today.

OTS officials made plans to shut down bus services early tonight, in preparation for a possible strike at 12:01 a.m.

They canceled trips after 11 tonight on routes 1, 2, 3, 4, 6, 13, 19, 421, 432, 433 and 434. They also canceled trips after 10 p.m. on routes 40, 42, 52/62 and 55/65.

"We certainly didn’t want to have passengers left in a parked bus," said J. Roger Morton, OTS operations director.

T.K. Hannemann, the Teamsters’ business representative and political coordinator, said the union has made contingency plans to pick up drivers in the event that they walk off the job.

"If the company has deemed to cancel the routes, that’s fine," Hannemann said this morning. "But at 12:01, if no agreement is reached, we are on strike." Yesterday, union members were preparing picket signs at their Kalihi headquarters.

The council’s strategies for raising the money to avert a strike include adding another penny to the tax on a gallon of gas and eliminating monthly passes completely in favor of a pay-as-you-ride plan.

At today’s hearing, bus driver John Young said the existing system of bus passes has sapped the city of revenue needed to finance the bus operations.

Young also disputed allegations that drivers are overpaid. "I am threatened at least once a month," he said. "I’ve been spit on, assaulted and involved in an accident causing death.

"I drive on the narrowest streets in one of the most congested cities in the nation," he added. "I earn every penny I’m paid every day."

Council members last night were leaning toward a flat fee of 75 cents for all passengers of TheBus except senior citizens, who would pay 25 cents for each ride.

Backers said the fare plan would plug the $6.8 million budget hole at the center of the labor dispute.

Even though the 75-cent fare is significantly less than the present $1.75 rate, only 15 percent of bus passengers pay full fare, council member Charles Djou said.

"That proposal is in the very, very early discussion stages," Djou said. "Everybody has been talking to each other fast and furious for the last several hours."

The council members’ negotiating comes at a critical point as they consider fare increases to avoid cuts in service and a strike.

Throughout much of yesterday, Councilman Mike Gabbard was trying to find five council votes for his proposal to increase the tax on a gallon of gasoline by a penny. Hawai'i has the highest gasoline tax in the United States and the extra cent would increase the 56.6 cents a gallon that O'ahu drivers pay in federal, state, county and general excise taxes.

The penny-a-gallon plan was criticized by some council members and also would only have generated about $1.9 million, according to Mayor Jeremy Harris’ calculations, requiring some form of fare increases.

Then Gabbard said he rejected increasing the gas tax in favor of "a better plan" that he said would prevent a strike.

Eliminating passes — $30 per month for regular riders and $25 every two years for seniors — would dramatically drive up revenue for TheBus, Djou said.

The system only averages about 27 cents per rider because the overwhelming majority use passes, Djou said.

"Seniors make up a huge percentage of our ridership," he said. "No. 2, you have a good number of commuters who buy a $30-a-month pass and that also brings the average down. Their costs are going to go up considerably."

Djou has concerns with the plan. It may not be attractive enough to keep large numbers of people out of their cars, Djou said, adding, "But it’s certainly better than the idea of a gas-tax increase."

At the start of the negotiations, the union was seeking 10 percent wage increases for each of three years of the contract. The union says it has a new proposal that calls for annual raises of 40 to 60 cents an hour, which amounts to

2 percent to 3 percent increases. The final offer will not be officially given to OTS until today’s meeting.

According to OTS, after five years of employment, bus drivers earn $21.27 per hour, or about $44,000 per year. OTS said the bus system’s budget is about $4.5 million lower than last year’s and that the union’s demands amount to about $30 million more in costs over the life of a new three-year contract.

The City Council has been struggling with proposals for more fare increases and service reductions to make ends meet. The union fears reductions in service will lead to layoffs.

"It’s all coming bang, bang, right after another," Djou said. "This is a very, very fluid situation."

Gabbard said he abandoned increasing the gas tax because "we got a better solution."

Councilwoman Ann Kobayashi, chairwoman of the budget committee, said earlier yesterday that she reluctantly supported increasing the gas tax.

"I wouldn’t mind paying a little more, although now isn’t a good time since the gasoline taxes are so high," Kobayashi said before the idea apparently was jettisoned. "We have the highest fuel taxes in the nation … But I will support it, if it will help provide a better bus service."

Bill Green, the owner of Kahala Shell, said a one-cent-a-gallon increase would further hurt his business. He said he only makes 2 cents on every gallon of gas he sells. And he loses 4 cents a gallon whenever a customer uses a credit card because of the fees involved.