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TUCSON, Ariz. -- Officials in Tucson are examining whether to take out a $13 million loan to bridge a funding gap in a project to build the city's new streetcar system.

The Arizona Daily Star reports that the bulk of the project's $197 million in costs are covered by federal grants and the Regional Transportation Administration.

The city's share of costs was penciled in at $26 million, but officials had contended the city might not have to pony up any money for construction because of declining construction costs and potential grant money was available. The new grants never materialized, and costs didn't sink far enough for the city to avoid paying.

Councilman Steve Kozachik was rankled by the possibility of taking out a loan.

"For the last two years, we've been told that the project is on time and in budget. And I've been saying neither is true," Kozachik said. "The cars are late and now we're told that we have a significant funding gap."

Council members are scheduled to decide next week whether to go ahead with pay raises that the council approved last spring for city employees.

With city expenses climbing and a list of over $1 billion in unmet needs, the city might not have the capacity to add $8 million annually to its budget to increase employee pay.

Mayor Jonathan Rothschild said he's not too concerned about streetcar costs for now.

"The city will face additional fiscal challenges in 2015, but if we can sell an adequate number of streetcar passes, that revenue, along with the reserve funds we have at the RTA (Regional Transportation Authority) for operation and maintenance, should keep the financial impact of the streetcar to a minimum," Rothschild said.

Unions hope the council doesn't renege on the raises.

Jason Winsky, government affairs director for Tucson Police Officers Association, said the council promised it would make compensating employees a priority and they should live up to that.

In the end, Winsky believes the council will allow the pay raises to take effect Jan. 1.

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Information from: Arizona Daily Star, http://www.azstarnet.com

Associated Press,

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