The fight about who will have final say on spending decisions of the soon-to-be-formed Honolulu Authority for Rail Transportation could be headed to court, after Mayor Peter Carlisle vetoed the operating and construction budgets for the transit authority.

Vetoes of the transit bills were among four announced Tuesday by Carlisle, who also approved a $1.9 billion operating budget for the fiscal year that was balanced with user fees and rate increases and a rise in the property tax rate for owner-occupant homeowners.

On the transit budgets, key City Council members have said they are confident the vetoes can be overridden, based on the 8-1 passage of the bills earlier this month.

Carlisle objected to language in the budgets bills — Bill 33 and 34 — that give the Council final authority over the spending decisions of the semiautonomous rail transit agency, known as HART. A charter amendment voters approved last year to create HART gives the body the authority to oversee virtually all aspects of the $5.4 billion rail project, he argued.

"By vetoing these bills, it is the intention of the office of the mayor to essentially abide by the will of the people," Carlisle said. "This is our opportunity to do what the voters asked for, expected and we plan to give it to them."

Council Budget Chairman Ernie Martin, who is poised to become the next Council chairman, said he expects colleagues to override the veto.

"I am confident that the Council is prepared to stand firm and override the mayor’s objections to the bills relating to the transit authority," Martin said in a statement. "While we would all prefer to avoid unnecessary and costly litigation, Council members will assert their right to review and approve certain expenditures in spite of the mayor’s opinion to the contrary."

Carlisle said he did not think a compromise could be reached, but stopped short of saying he would go to court if the Council overrides his veto.

"It depends when and where and essentially whether there can be a way of avoiding that," he said. "It might also involve the dynamics of the HART board’s existence and what they’re interested and inclined to do."

Councilman Stanley Chang said he also hoped to avoid a court fight.

"I think there were iterations of the budget that were acceptable to the administration, at least on some level," Chang said. "So I look forward to continuing to work closely with the administration to achieve some sort of agreement."

The city Rapid Transit Division, now part of the Transportation Services Department, will move under the authority of an executive director and a 10-member appointed board when the new fiscal year begins July 1. The Council budgeted about $17.5 million for fiscal 2012.

The vetoes are not expected to immediately impede progress of the rail transit project, but ultimately the differences would have to be reconciled. If the Council overrides the veto, its budget would be in effect. If a judge rules the Council doesn’t have the authority, the HART board would vote on its budget.

Carlisle vetoed one other transit-related measure, Bill 35, which would authorize reimbursement from the transit fund to the general and highway funds any money for rail-related costs incurred before 2007, when the transit fund was established. The mayor cited an opinion by the state attorney general saying that such reimbursements would be against state law.

The mayor also vetoed Bill 36, reinstating a discount on tipping fees charged to companies that recycle materials and dispose of the nonrecyclable residue at the Waimanalo Gulch landfill.

Earlier this year the Council and the mayor approved elimination of a decades-old subsidy providing an 80 percent discount on such tipping fees. Bill 36 would have reinstated the discount at 50 percent with a phased reduction to 20 percent.

Carlisle said Bill 36 would have cost the city about $2 million in the upcoming fiscal year. The subsidy had cost the city more than $26 million since 1998.

Community activists had criticized the discount as "corporate welfare" primarily benefiting a single company, Schnitzer Steel Hawaii, which received about $2 million from the program last year. Schnitzer argued that the discount was applied equally, and its benefits were based on the size and scale of its recycling operations.

"Bill 36 would have allowed Schnitzer Steel and other recyclers enough time to adjust our operations and ease the transition for our suppliers and the public," said Jennifer Hudson, Schnitzer’s government-public affairs manager.