Gov. Linda Lingle sent word to the state Legislature yesterday that she will veto a bill giving counties the option to raise the general excise tax for mass transit, a decision that places the future of a Honolulu rail project into grave doubt.

House and Senate leaders do not believe they have enough votes to override a veto but indicated yesterday that a veto may be invalid because of a technical error in Lingle's initial June 27 veto warning.

State lawmakers, who plan to meet on Tuesday to consider veto overrides, could agree to Lingle's demand that they change the bill so counties, not the state, would collect any tax increase, but that seemed unlikely yesterday.

"They have the last word on this; I don't," Lingle said in an interview. "They get to determine in the end whether this bill passes or not, whether it becomes law or not."

Mayor Mufi Hannemann has said a Lingle veto would likely kill a Honolulu rail project, and the governor's announcement, made through a spokesman yesterday afternoon, followed what appeared to be final attempts by both the mayor and House and Senate leaders to address her objections and satisfy her.

No one was ready to call the transit tax dead, given the unpredictable nature of politics, but one city lawmaker described it as "high drama on Punchbowl Street."

The bill would allow counties to raise the state's general excise tax from 4 percent to 4.5 percent to pay for transit projects. Honolulu has sought the revenue, about $150 million a year, for a rail project that would link the growing western suburbs with downtown and give commuters an alternative to congested roads and highways. A local finance source also has been seen as critical to get federal money for the project.

Hannemann met with Lingle Thursday evening at the state Capitol, and state and city staff talked yesterday morning about practical ways in which the city could collect the tax. The mayor, who has said it would be too costly for the city to collect the new revenue, sent a letter to Lingle yesterday telling her he had set aside many of his misgivings after recognizing the need for compromise.

House and Senate leaders also sent Lingle a letter noting a "legal cloud" over a potential veto but pledging to fully consider her concerns about the transit tax during session next year.

The mayor and state lawmakers thought they had addressed Lingle's concerns, but the governor quickly announced her veto, causing some confusion and disappointment at Honolulu Hale and the Capitol.

Hannemann left for a trip to Japan to market Honolulu's centennial celebration and could not be reached for comment. Earlier, he had been hopeful that a compromise had been reached.

"I really believe this is our last chance," he said. "If we don't make it happen this year, it ain't going to happen in our lifetime and traffic is going to get worse. Because there's no other solution on the table."

Senate President Robert Bunda, D-22nd (N. Shore, Wahiawa), said he could not understand Lingle's rejection. "I thought that was a good-faith effort on our part," he said.

State lawmakers immediately questioned whether a veto would stand after Lingle listed the wrong bill number in one section of her veto notification, a technical mistake that could be challenged in court. House and Senate attorneys, after an initial legal review, believe that the bill could already be law because of the error.

Attorney General Mark Bennett released a legal opinion yesterday that the error — made on five veto warning messages — was a clerical mistake that did not invalidate the constitutionally required notice to lawmakers.

House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo, Wilhelmina Rise), said the error was major.

"She created the problem, and there is now a legal cloud surrounding this bill. This has put the future of transit solutions for Honolulu in great jeopardy," he said. "What's at stake is our ability to secure federal funding for transit projects. Any legal uncertainty or litigation will seriously affect the way federal officials view Hawai'i's application for funds.

"This is an error that cannot be undone. We are asking the governor not to veto the bill."

Honolulu City Council member Nestor Garcia said he still hopes the governor and the Legislature can agree on the transit tax before this week's veto deadline.

The City Council has already cast two of the three necessary votes for the tax in anticipation that the bill would become law. "I think all this time we had been anticipating that this might be heading down a very dark and bumpy road," he said. "It is high drama on Punchbowl Street."

Lingle said her advisers had made it plain to lawmakers that they had to either amend the bill now or make a commitment in writing to amend it next session if they chose not to meet again this year. The governor also said she told Hannemann she would veto the bill if the state collects the tax.

"I was very clear to the mayor (Thursday night) that I cannot support and that I would veto a bill that has the state set up to collect this tax. So he's very clear on how I feel about this," she said. "Very clear."

The issue of whether the state or counties would collect the revenue was not a driving force during the debate in the Legislature over the transit tax, although Lingle's tax director, Kurt Kawafuchi, had consistently opposed state collection. It was only during the past several weeks that Lingle and her top advisers raised the possibility that she would veto the bill over the issue, surprising some lawmakers.

Lingle has been under heavy pressure from Republicans to veto the tax and from Hannemann and others to let the bill become law. Several Democrats opposed sending Lingle any olive branch, preferring that the governor either support the bill as written or follow through on her veto threat and possibly take the blame for killing rail.

Sen. Sam Slom, R-8th (Kahala, Hawai'i Kai), said the governor risked disappointing core Republican supporters by backing the transit tax. "People were saying, 'Wait a minute. What's happened to Linda Lingle? What's happened to the New Beginning?' " he said of her campaign theme. "Well, it looks like Linda Lingle is back."

Cliff Slater, one of the main opponents of rail, said he believes that public opinion against the tax is growing and is already stronger than the opposition in 1992, when the City Council rejected a transit tax at the last hour.

"What we're getting is a solid indication that the folks are opposed to a tax increase," Slater said. "They are up to here with tax increases."