Saying there's no turning back now, Mayor Mufi Hannemann yesterday signed into law a tax increase to pay for mass transit on O'ahu and promised a fair, open and swift process to make it a reality.

Groundbreaking on a new mass-transit system with rail as its centerpiece could come as early as 2009, Hannemann said.

The new law allows the city to increase the state's 4 percent general excise tax to 4.5 percent, which is expected to cost each household on O'ahu $245 to $450 a year from the time the increase begins on Jan. 1, 2007, until it ends at the end of 2022.

That will raise about $150 million a year to help pay for the proposed mass-transit system, which could run from Kapolei to downtown Honolulu or beyond, officials say.

"Yes, it will cost something, but everything in life costs something," Hannemann said. "To the opponents, I say: What is your alternative?"

The city hopes to sign a $10 million contract with a consultant later this month, begin public hearings by November and complete both an analysis of transit alternatives and a draft environment impact statement on the preferred project by early 2007, Hannemann said.

Federal funding requires the city to study several alternatives, including not building anything, expanding existing services and developing a new transit system.

While the process will be open to all proposals, Hannemann said a multimodal system built around a main rail line remains the administration's preferred alternative. That system could include more feeder buses, ferries, tollways and even more highways if they complement the rail project, he said.

"I've yet to see another alternative that works," Hannemann said.

Yesterday's signing was the latest step in a nearly 30-year effort to develop a new mass-transit system on O'ahu. A 1980s plan to build a rail system died when a new mayor took office; another rail plan failed in 1992 when the City Council failed on a 5-4 vote to approve a tax increase for it; and a proposed Bus Rapid Transit system died earlier this year.

"Boy, it's really been a long haul to get to this point," said Councilman Gary Okino, who has worked on city transit plans for more than 40 years.

"All those years, we always knew that Honolulu was perfectly suited for a rail system. Now, we're finally there. I'm only hoping I'll still be around to see that first train taking off with passengers between Kapolei and Honolulu Hale," Okino said.

Although planning for a major transit system often takes two or three years, Honolulu officials plan to use some of the studies done earlier to help expedite the process, Hannemann said.

"The onus is on us, and we welcome that pressure," he said. "We will run an open community input process that will bring people together for a spirited discussion, but it's clear we don't want to go back and we don't want that status quo. We want to move forward, and that is what we are going to do today."

The excise tax is imposed on nearly every wholesale and retail business transaction. Businesses in Hawai'i pay the state a 4 percent excise tax on their gross revenues, including revenues from the tax that they charge consumers. To compensate for this, merchants are allowed to pass on the total effect of the excise tax to the consumer.

Hannemann said the city and state are continuing negotiations to determine who actually will collect the revenue, but if an agreement cannot be reached, "we'll just sit back and let the state collect the taxes" as required by the state law authorizing the increase.

Reach Mike Leidemann at mleidemann@honoluluadvertiser.com.