A new streetcar sits on the rails along H St. NE, on Dec. 14, 2013, near the intersection with 4th St. NE in Washington. (Eva Russo/For The Washington Post)

The District’s fledgling streetcar system — which has faced long delays and cost increases, and has yet to carry a single paying passenger — is facing a gut check.

On Wednesday, the city council is set to vote on Chairman Phil Mendelson’s plan to sharply roll back Mayor Vincent Gray’s proposed budget for the program and to dramatically reduce a generous, recurring revenue stream approved last year that streetcar backers say is crucial for the project.

Mendelson would use the money instead on a far-reaching package of tax cuts for District residents.

Gray administration officials warn that the move could imperil the system before it gets started, leading to years or decades of delays. “It would derail the future of streetcar,” said Gray spokesman Pedro Ribeiro.

But Mendelson’s allies say restraint makes sense given problems with how the program had been run by the District’s Department of Transportation thus far, and argue that the council can add more funds — if they are warranted — during future annual budget deliberations.

Mendelson said that the council is “concerned about DDOT’s capacity to effectively manage the project. Given these concerns, it would not be prudent to double the project budget,” as Gray has proposed.

Gray has called for spending $884 million for the program over the next six years, up from the roughly $400 million the council approved last year. Instead, Mendelson is proposing to spend $400 million on streetcars during the coming six years, plus another $187 million for a bridge replacement along H Street NE, site of a long-promised line that is still being tested.

But beyond the initial six years, Gray administration officials say it’s Mendelson’s proposed structural change in the way the annual funding is calculated that would do the most long-term damage to their vision of seeing streetcars rolling on tracks throughout the District.

Last year the council voted to reserve 25 percent of projected local revenue increases in future years, based on calculations using next year’s numbers, for the streetcar project. That represented a vast financial commitment. Within a few years, more than $200 million would be set aside annually, and that number was expected to keep growing to more than $500 million a year in 2025.

Mendelson would upend that formula with an arcane — but potent — tweak. Instead of taking 25 percent of the difference between any future year’s revenue and whatever the total is in 2015, he would instead use only the difference between revenues from year to year. That would range from $44 million to $67 million annually over the next decade or so, according to current projections.

Gray’s budget director, Eric Goulet, said that change would blow a hole in the streetcar budget. According to Goulet’s figures, the city would need $1.3 billion to complete the first 22 miles of the streetcar system. But if Mendelson’s proposal is adopted by the council, the city would set aside just $460 million.

Building an even larger system of about 37 miles would cost a total of $3.1 billion, according to Goulet. But under Mendelson’s plan the city would reserve just $668 million for that purpose by 2025, he said. The figures are for what the city calls its Integrated Premium Transit System, which includes Circulator buses.

“It’s a huge difference,” Goulet said, adding that at that rate it would take decades to finish the project. He said rising property values along the lines would boost city revenues. “The value of those corridors would increase dramatically,” he said.

Ribeiro said Mendelson was “mortgaging the city’s future in order to provide tax cuts for those who don’t need tax cuts.”

“The District is a booming city … We have to address the infrastructure needs of the city today, not 45 years from now,” Ribeiro said.

But Mendelson, in his proposal to the council, said the roughly $3 billion in projected streetcar funding “is not sustainable, nor is it the best use of District resources.”

“Without this proposed change, by 2018 the operating funds set aside for the streetcar project would roughly equal the District’s annual revenue growth” and only keep soaring from there, Mendelson said.

While the council supports the streetcar initiative, “setting aside such a large portion of operating funds prevents implementation of other worthy programs and initiatives, such as the broad based tax relief for District residents and businesses proposed by” the city’s Tax Revision Commission, he said.

Mendelson also called on Gray to “restore confidence in DDOT’s ability to manage the project” by providing solid plans for avoiding wasteful spending on maintenance facilities and problems connected to bridge replacements.

Transportation committee chairman Mary Cheh (D-Ward 3), whose committee endorsed Gray’s full, six-year budget request, said Wednesday’s debate will hinge on several key issues.

The question is “whether you’re going to go with the Mayor’s increase or stay with the funding the council approved last year,” Cheh said. “There’s this debate: Do we need the increase, and if we do, do we need it now? And if we do need the increase, and we don’t need it now — and we need it later — will we get it later?”

Cheh added that she wants “some assurance that we’re going forward with the project, and if it turns out a few years down the road that more money is needed that we’ll be prepared to put that money in.”

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