The Federal Transit Administration has included funding for the Honolulu rail system in President Barack Obama's fiscal 2011 budget, in anticipation of the rail plan's clearing environmental review.

Agency Administrator Peter Rogoff's announcement yesterday in Washington, D.C., signaled the Obama administration's commitment to fund the $5.35 billion rail transit between East Kapolei and Ala Moana—when Gov. Linda Lingle has raised questions about the financial viability of the rail system.

Honolulu Mayor Mufi Hannemann said the $55 million included in the 2011 budget was the first time federal transportation officials have included the Honolulu rail system in their budget and reflects their confidence in the project.

He said the funding was also the largest allocation for a new rail transit project in the 2011 budget.

“;Today's financial support validates our financial analysis. ... They know this is an excellent project,”; Hannemann said yesterday. “;I really believe now more than ever, we need to move forward on this.”;

Hannemann said he hoped Rogoff's speech would help to persuade the governor to send some positive messages about the project.

“;Don't be so negative. Keep positive. This is great news,”; Hannemann said.

Lingle said statements made by Rogoff yesterday support her administration's position that close scrutiny of the financial plan for the city's rail project is warranted.

“;We are pleased that FTA Administrator Peter Rogoff confirmed the federal government is continuing to work with the city to strengthen the financial plan and that they will evaluate a new financial plan when the city submits its application for final design,”; Lingle said. “;We're also pleased that Administrator Rogoff recognizes my role in the approval process and understands why I will move forward on an independent review to ensure the financial viability of the project.”;

The proposed $55 million would be part of the $1.55 billion in federal money applied toward the cost of the project.

The Hannemann administration has said the project will generate 10,000 jobs.

Rogoff said financing for the proposed Honolulu rail system was in better shape than many proposals by other cities.

Lingle has also said she is reviewing whether the elevated rail could be lowered to street level in portions of Honolulu.

The Hannemann administration has said exploring the at-grade option would effectively kill the proposed project by requiring a new environmental impact statement.

Rogoff said no fewer than 13 state agencies under Lingle already have participated and provided comments as part of the environmental review process for the elevated rail system.

He said he was somewhat confused by Lingle's statements. “;I have to be honest. We're finding the process of involving the governor to be somewhat perplexing,”; Rogoff said.

Rogoff said while he does not begrudge the governor having an independent financial look at the project, the Federal Transit Administration also takes an independent look at the financing proposed by Honolulu city officials.

“;We will do so again when they present a financial plan at final design,”; he said.

The project has received $65 million for studies, including preliminary engineering, through congressional requests.

Hannemann said the financial plan for rail continues to rely mainly on obtaining revenues through a 0.5 percent general excise tax imposed on Oahu residents.

He said the environmental impact statement is 99 percent complete.

Once the final environmental impact statement is released, the public will have a month to comment on it, before it can be signed by the governor.