Tax collections needed to build Honolulu's $5.3 billion commuter train fell 16 percent in November from a year ago as economic activity in Honolulu continued to slow.

Transit tax collections last month totaled $13.2 million, versus $15.8 million in November 2007. Through the first five months of the fiscal year that ends June 30, transit tax collections are down nearly 6 percent to $67.7 million.

The decline in collections comes less than two years into a 15-year tax hike adopted to fund construction of the elevated train from East Kapolei to Ala Moana. The city's rail plan anticipated transit tax revenue growing each year, but plunging visitor arrivals, slumping real estate sales and a downturn in construction activity make it unlikely revenue will be up this year.

The city hopes that any near-term revenue shortfall will be offset by an economic rebound in future years, said Wayne Yoshioka, director of the city Department of Transportation Services, which is overseeing the train project.

"Right now we're not concerned," Yoshioka said. "While the current collections are down, we feel that in the future, given the way things move cyclically, it should even out.

"What was important is that over the life of the project we have some (revenue) assumptions in there that we think are conservative. What we've been told by those that have reviewed us is we have been conservative."

The project's budget includes $1 billion to cover potential cost overruns, which could provide some leeway if tax revenues are lower than expected.

Voters narrowly approved the rail project in November as frustration over congested roads outweighed concerns about costs.

The state began collecting a half-percentage-point general excise tax surcharge for transit in January 2007, and $283 million was raised in the first 23 months, according to state tax department records.

City officials hope to raise nearly $4.1 billion, on an inflation-adjusted basis, between 2007 and 2022 to pay for the 20-mile rail system. That, coupled with about $1.2 billion in anticipated federal funds, is expected to pay the $5.3 billion in capital costs associated with rail, according to the city's financial plan.

Under that plan, the city expects to net $188 million in the current fiscal year ending June 30. That means the city needs to collect an average of about $17 million a month for the remaining seven months of the fiscal year. The average monthly take during the first five months of the fiscal year was about $13.5 million.

(Those figures, and all figures in this story, do not include the 10 percent the state takes off the top to pay for administering the tax.)

REBOUND UNLIKELY

A rebound in tax collections this fiscal year seems unlikely. In late October the state Council on Revenues, which generates forecasts used to set the state budget, predicted that overall state tax revenue will decline 0.5 percent this fiscal year and warned that the state's financial picture could deteriorate even more because of the volatility of the nation's economy.

The current economic slowdown is forcing the state and city to reduce tax collection forecasts and reduce spending.

Even with the slowdown in tax revenues, the city is still collecting much more than it is spending because construction isn't scheduled to begin in full until late 2009. If transit tax collections don't meet expectations, the city may need to sell bonds sooner than expected to finance construction, which could increase finance charges.

Outside experts who have analyzed the city's tax revenues projection include Bank of Hawaii chief economist Paul Brewbaker, who has said the estimates were reasonable given the cyclical nature of the economy.

If transit tax collections don't meet expectations, the added burden would fall on local taxpayers.

Lowell Kalapa, president of the nonprofit Tax Foundation of Hawai'i, which opposes the transit tax, doubts the city will be able to make up lost tax revenues in future years.

"It doesn't look good," he said. "Because it's so sensitive to how people spend, (the general excise tax) is really not that dependable in the long term because consumerism is cyclical.

"When (collections) start falling by more than 10 percent of projections, you're never going to make that up because this is good for only 15 years," Kalapa said.