Now begins the inevitable tunnel showdown between the mayor and the city council.

Mayor Mike McGinn will transmit a draft ordinance to the city council today that says the city won't give permission to built a deep-bore tunnel under downtown until the state legislature removes a provision that caps state spending on the project and says Seattle must pay for cost overruns. McGinn will hold a briefing at 10:30 a.m.

The city must approve the contract—with or without the cost overrun language—before the tunnel machines can begin digging. The council says no more clarification is required and, by all accounts, is prepared to gut the key provision. McGinn argues that the liabilities for any overruns on the $4.2 billion megaproject must be addressed now, and he's vowed to veto any bill that doesn't.

McGinn's version of the contract will contain robust language, sources at City Hall say, that make it unequivocally clear that the state must pay for all overruns on its portion of the project ( which include the tunnel itself, removing the Alaskan Way Viaduct, the tunnel portals, and some waterfront improvements). Before the city's agreement takes effect to let the state begin digging, the legislature must clarify state law—which currently caps the state's commitment to the project at $2.8 billion and requires Seattle property owners to pay any overruns—to remove the cap on state spending and the provision about Seattle taxpayers, the draft contract says.

The city council majority—led by Council President Richard Conlin—has repeatedly said efforts to clarify who pays for overruns are simply an attempt to kill the project. But as I reported last week, council member Nick Licata has support on the council to require the state to reserve $290 million of the project budget for tearing down the Alaskan Way Viaduct and rebuilding the waterfront (essential to a pleasant waterfront, which is why we're doing this in the first place)—and to complete the project regardless of cost.

But in order for Licata's provision to work, sources at City Hall say, the contract must stipulate that the legislature act before it can take effect.

The mayor's contract takes it a step further by requiring that the state complete the entire project regardless of costs.

What to expect next: The city council will hold a few hearings, grab its box of red pencils to edit McGinn's version of the ordinance, remove the McGinn provision, and pass the bill (a memorandum of agreement with the state). Then McGinn has a week to veto it. The council then must attempt (most likely with success) to override that veto. Somewhere during this fight, McGinn's expert of tunnel cost overruns will release a report on the uncalculated risks that the city and state haven't considered, which could add costs to the project, demonstrating the need to clarify who will pay. This will take about a month, maybe more.

The talking points are sure to be severe and, most likely, hyperbolic on both sides. Two quick points: (1) Seattle is not on the hook for cost overruns. But the state does have a spending cap that means if money is exhausted, it's unclear who would pay to finish the project. In addition, the state's bonding plan for contractors doesn't require them to cover the full potential costs, so it's possible that contractors would be unable to cover the costs if they' can't complete their end of the deal. So while Seattle can't be forced to pay, it's unclear—if not the state or contractors—who would pay. (2) This provision from McGinn not a delay. The state requires that an environmental impact study—examining various proposals for a tunnel, a viaduct rebuild, surface/transit—be complete before the contracts are signed. That study isn't done until next summer. Bidders are creating proposals for the contracts with plenty of contingencies, so creating a contingency that requires sensible action by the legislature next winter can be taken care of before the impact study is complete.

"You get it done, you bring it to my desk, I'll sign it," were the words from Governor Chris Gregoire at a tunnel oversight committee meeting on June 3.

But the question, obviously, is whether or not most state legislators would pass such a bill up to Gregoire. If they do, then great. If they don't, they're saying the risk of cost overruns is real and they don't want to pay. But what legislators shouldn't do—unless they want to look like hypocrites—is claim that tunnel overruns aren't realistic and then, clearly afraid of them, refuse to pay the bill.