In his email newsletter sent out yesterday Seattle City Councilmember Nick Licata nails it regarding the $2.8 billion spending cap on the deep-bore tunnel project.

Licata makes the case that the spending cap, not the cost overrun provision, is likely to be the bigger problem in the long run:

The most important project element for Seattle is taking down the current Viaduct to free up the waterfront to pedestrians. The State funding toward viaduct removal and rebuilding Alaskan Way is $290 million, but the State could use this money to cover any additional tunnel costs. The City could argue that the State was still obligated to do the project, but if the money isn't there, the State Legislature would have to approve funding, which would put Seattle in a weak position. This problem could be solved by the State and the City agreeing in advance to put aside the money for the waterfront, thus creating a separate locked box for it.

Another major part of the tunnel project, to be tackled after the tunnel is completed, is to reconnect Thomas, Harrison and Republican streets across Aurora Avenue, to "reconnect" the street grid between Queen Anne and South Lake Union. It is a critical engineering task, necessary to avoid congestion problems on Mercer and facilitate access to the tunnel. The same approach of separate funding should be undertaken with this project as with the waterfront; in a worst case scenario, this is the portion of the tunnel project that could be sacrificed - it would be the most difficult one to convince the State Legislature to fund if this money is used for the tunnel.

Agreed. So then, what do Licata and the rest of the Council propose to do about it?