The City Council Budget Committee approved several transit-related measures yesterday, including a proposal that authorizes the city to issue and sell general obligation bonds for the rail project.

The Council is scheduled to take up the measures Wednesday.

Bill 40 was passed out of committee with one objection. Councilwoman Ann Kobayashi echoed concerns raised by several members of the public, asking why the city needs to borrow for the project when administration officials have said time and again it would be paid for with money from the general excise tax surcharge and federal dollars.

The city is seeking $104 million in bonds to get some working capital for the $5.3 billion rail project.

"We haven’t even begun and you don’t know what all the costs are and you’re going into the bond market to obligate the taxpayers," said George Fox, president of Advocates for Consumer Rights. "That’s unconscionable."

The city stated its intent to use bonds to finance the project in the environmental impact statement and in its financial plans dating back to 2009. City Transportation Services Director Wayne Yoshioka said short-term borrowing would be needed midway through the project because more money would be going out than was coming in from the surcharge and the federal government.

The committee also approved a bill seeking repayment to the general and highway funds of money expended before 2007 on the rail project.