Taken out of the calculation is the replacement of the Alaskan Way seawall north of Union Street — something that isn't integral to the viaduct replacement. That would save an estimated $350 million.

The state has also come up with other cost savings.

In addition, the city said it will defer its expensive plan for lowering Aurora Avenue North north of the Battery Street tunnel, although that project wasn't factored into the original $4 billion.

"The gap is closing," said Seattle Deputy Mayor Tim Ceis. "The city is working with the state on what our commitment will be, and the gap will shrink more."

Ceis said he wasn't ready to reveal how much money the city intends to put into the tunnel replacement. But according to a draft document prepared by the city, Seattle could raise $250 million from transportation revenues and $300 million from its utility funds. That could require an increase in city utility fees.

According to the draft, that would make $3.24 billion available for building a tunnel, including $2 billion earmarked by the new gas tax and $200 million the Port of Seattle is expected to donate. Replacing the core portion of the viaduct from South Washington Street to Battery Street with a tunnel would cost about $3.5 billion, the report said.

Additional money for replacing the rest of the seawall and lowering Aurora Avenue could come from the federal Army Corps of Engineers and by asking voters in the region to raise taxes, assessing local businesses and perhaps even adding tolls.

State officials said they are willing to study the use of tolls on the viaduct, although they worry that tolls could be problematic because of exits downtown and that drivers might instead go to an already-crowded Interstate 5.

Building the core

Ceis said the new figures show that the state can commit to the tunnel option knowing there is enough money to build the core project. "This gets away from the notion that the tunnel is not affordable," he said.

Both the city and the state say the tunnel is the preferred alternative for replacing the viaduct. But the state has said that if the tunnel money can't be found, it will replace the viaduct with an aerial structure. Some legislators support that approach.

The state says it now has enough money to rebuild the structure but not to replace it with a tunnel.

Doug MacDonald, secretary of the state Department of Transportation, agreed that the gap between the tunnel and the rebuild option is shrinking, but he was not ready to abandon simply rebuilding the viaduct.

"The goalposts are moving closer, and the ball is moving down the field," MacDonald said. He said the new plan is being referred to as "tunnel light."

Lowering Aurora

The city wants to lower portions of Aurora Avenue north of the Battery Street tunnel to allow more east-west traffic across the corridor and to connect the Queen Anne and South Lake Union areas. But the city says it's willing to delay that project to get a tunnel as a replacement for the viaduct.

"If [Seattle Mayor] Greg Nickels wins Universal Power Ball and wins an $800 million jackpot, he'll get lowered Aurora," MacDonald said. "But this is about replacing vulnerability. What the city has done is begin to scale down its aspirations to give it a reasonable chance to get that money."

David Dye, viaduct project manager with the DOT, said there is now $2.79 billion committed for the viaduct. Of the $3.5 billion now estimated for replacing the viaduct with a tunnel, about $2.5 billion would pay for a 10-block tunnel from King Street to Pike Street, Dye said.

Ceis said the city acknowledges it makes sense to split up the projects on its wish list and use the available funds on the tunnel.

"People should start believing us," he said. "We're going to get there."

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