The Honolulu City Council on Wednesday approved operating and capital improvements budgets for the city’s troubled rail project, but in doing so slashed funding for the project’s staff and office space, and tightened the screws on construction money.

A $19.26 million operating budget cut $807,000 for office space rent funding, about $570,000 in salaries and $1 million for attorneys’ fees. Instead, the final version of Bill 18 designates $2 million to establish a transit mitigation fund for landowners and businesses harmed by rail construction.

Dan Grabauskas, chief executive officer of the Honolulu Authority for Rail Transportation, said the reduction in office space funding might be problematic because it would likely mean eliminating an entire floor of offices at Alii Place and moving some staff members into other HART space in the building. The lease for that space isn’t up until July 2017, and HART might be penalized if it were to vacate that space early, he said.

Grabauskas asked the Council to give him some time to work up a relocation plan, but the Council refused.

The cut in staff funding would mean the loss of about a dozen planners, engineers and project managers, Grabauskas said. Eliminating those jobs “will be a stress” because construction is ramping up, he said.

Bill 19, a $2.16 billion capital improvements budget, includes a proviso, pushed by Councilman Trevor Ozawa, assigning $12 million for a study examining planned route extensions to downtown Kapolei and the University of Hawaii-Manoa.

A proposal by Council Chairman Ernie Martin to delete from the budget approximately $744 million for the planned city center guideway and accompanying rail stations was discussed but not voted on. That proposal would effectively have meant the rail project could go no farther than the Middle Street station.

What the Council did insert were provisos capping the amount of money that can be spent on the project at $6.8 billion — the estimated price tag that HART gave recently, despite federal transit officials now maintaining that the price tag could go to $8 billion or more.

If HART wants to spend beyond $6.8 billion, it would need to return to the Council and get a resolution passed to tap contingency money, Council Budget Chairwoman Ann Kobayashi said. “We need some oversight,” she said.

HART Board Chairwoman Colleen Hanabusa said she appreciates the Council giving the agency the ability to return to the Council.

But Councilman Brandon Elefante, a staunch rail supporter, voted against the changes and warned that there could be dire consequences.

“By placing these artificial caps on the total revenues that may be expended for the project, we place the entire project at risk, create further delays, and inevitably increase the cost of the overall project,” he said after the votes.

Mayor Kirk Caldwell has 10 working days to sign the measure, veto it, or let it become law without his signature.