"We confront fiscal issues that have been ignored for too long," Nutter said as he began his budget address to City Council. "The time for heavy lifting has arrived."

The city's fiscal watchdogs described Nutter's budget as far-sighted and "honest," and said it prudently prepared for the slowing economy.

They also praised one of its more unorthodox elements: Nutter's surprising choice to set aside $403 million to be spent on yet-to-be-negotiated contracts with the municipal unions.

Yet budget watchers said Nutter's long-term plan included real risks. The $403 million may not be enough to cover the final union contracts, for instance.

Another big question mark is the bond deal. If Nutter's team can pull it off, it could solve one of city's most pressing long-term financial problems, and provide an extra $50 million a year for Nutter's initiatives. But it is far from a sure bet.

"It is a creative solution, and that's a good thing, but there are lots more questions that need to be answered before we know if it'll work, when it'll work," said Uri Monson, executive director of the Pennsylvania Intergovernmental Cooperation Authority, which oversees the city's budget.

Throughout his address, Nutter linked the spending plan to his administration's explicit goals - such as a 25 percent reduction in the homicide rate this year - a technique known as "outcomes-based" budgeting.

"We are trying to back up our words and commitments with this document," he said later.

To that end, it calls for an extra $78 million for the Police Department over the next five years, with the goal of putting 400 more officers on patrol by the summer of 2009 to reduce violent crime.

To improve the city's low rate of residents with college degrees - which Nutter has vowed to double - the budget would grant Community College of Philadelphia an extra $4 million a year, a 16 percent increase.

To spur economic growth, the city would eliminate the gross-receipts portion of the business-privilege tax within eight years, and begin to cut the net-income portion of the tax as well.

To build what Nutter calls "healthy and sustainable" neighborhoods, he wants a 46 percent increase in city funding for the Fairmount Park Commission over the next five years, and $25 million over the same period for a citywide single-stream recycling program to improve the city's 6 percent recycling rate.

Yet Nutter's budget wasn't all good news.

The city's parking tax - levied on the operators of private garages and typically passed to customers - will increase from 15 percent to 20 percent if Council approves the mayor's plan.

And to pay for the business tax cuts, Nutter's team has slightly decelerated scheduled cuts to the resident wage tax. It's a surprising move for a tax hawk like Nutter, but further wage-tax cuts funded by state casino revenue are likely to be authorized soon, and the administration planned for that.

Innovation Philadelphia - an economic-development organization and a favorite of former Mayor John Street - would lose all its city funding. Likewise, the city-owned William Penn camp would close this year, while the city's Riverview Nursing Home might be shuttered within a few years.

Several Council members were concerned that the budget did not do enough to fund affordable-housing programs.

Nutter said he would add $1 million a year to the city's Housing Trust Fund, which finances affordable housing projects, and set a goal of 1,000 new affordable units a year.

But shrinking federal housing subsidies and a declining real estate transfer tax are leaving the city with less and less to spend on affordable housing. The problem is exacerbated by the end of Street's Neighborhood Transformation Initiative, which provided millions of dollars to acquire properties and prepare sites.

"I'd like to see a stronger commitment to affordable housing," said Councilman Darrell L. Clarke, the majority whip.

The fate of hundreds of the popular after-school programs also concern some Council members. The programs stand to be closed under Nutter's budget. The city-funded nonprofit Philadelphia Safe and Sound provided money for the programs on the Street administration's go-ahead, but Council never authorized that funding, and Nutter has not moved to reinstate it.

Dozens of children filled the balcony of Council's chambers during Nutter's address, chanting and waving signs that read, "Have a heart."

The matter has become a political headache for Nutter, and Council will hold hearings on the Safe and Sound programs next week.

For the most part, however, Council seemed pleased with the Nutter plan, which would increase funding for many of their personal priorities.

Health centers would get $3 million more, which pleased Councilwoman Marian B. Tasco, the majority leader, as did Nutter's plan to reopen the Office of Arts and Culture and swing $2 million to the cultural fund.

Councilman Jim Kenney's long campaign to have the city adopt a 311 call center to handle citizen service requests, as well as a "PhillyStat" program to track department performance, get $2 million in Nutter's budget. Both programs are expected to be running by the end of the year.

And a $3.8 million investment in the city's emergency-response time left Council President Anna C. Verna "ecstatic," as did the 2009 capital budget, which would sink $121 million into the city's infrastructure, more than double this year's total.

"I think many of the issues we've been concerned about for many years now finally seem to be getting addressed," Verna said.

Council will hold extensive hearings on the budget in the weeks and months to come. The City Charter requires final approval by May 31.

Watch a slide show of the mayor's budget address at http://go.philly.com/

NutterBudget

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