He said he’ll approach the Hawaii Legislature and Gov. Neil Abercrombie about re-allocating the money the city has raised for rail toward fixing up aging sewer and water systems.

The 2005 Hawaii law giving Honolulu permission to levy the half-cent GET surcharge said the money could only be spent on new transportation systems.

But Cayetano told Inside Honolulu that of the $2.5 billion the surcharge is expected to generate in the next decade, he only needs $1 billion for his projects — half for sewer and half for water. The other $1.5 billion can go back to the state, he said.

“If they don’t jump at that, they’re stupid,” he said of lawmakers.

The Honolulu Star-Advertiser reports today (subscription required) that Cayetano told the Downtown Exchange Club about his plan at a Thursday luncheon. The headline and story also say he’d spend the rail money on buses.