The Honolulu rail authority is now projecting the direct financial impact of the pandemic on the finances of the city’s rail project will be less severe than it originally projected.

The Honolulu Authority for Rapid Transportation initially predicted the shutdown of the local economy last year to prevent the spread of COVID-19 would cause the rail project to lose about $435 million in general excise and hotel room tax collections. Those two taxes provide the bulk of the construction funding for the project.

As it turns out, the rebound in the Hawaii economy has been stronger than expected, which effectively reduces the financial impact of the economic downturn on the state’s largest public works project.

HART now expects the overall loss in tax collections for rail will be limited to about $265 million, according to Chief Operations Officer Rick Keene.

While that represents some improvement, HART is still urgently trying to develop a workable new financial plan to allow the city to complete the 20-mile rail line from East Kapolei to Ala Moana Center. The project is now expected to cost as much as $12.4 billion, and must somehow close a budget shortfall of up to $3.6 billion.

HART has hired a consultant to review its estimates of the total cost of the project and the time it will take to finish construction of the rail line, and hopes to complete that review in September or October.

Executive Director Lori Kahikina told the HART board last month that an updated “recovery plan” for the project will probably not be completed until after the end of the year.