'WHAT DO we do now?" asked Bill McKay, the newly elected senator played by Robert Redford in the 1972 movie "The Candidate."

It's hard to imagine newly elected Mayor Michael Nutter uttering that classic Hollywood line.

Nutter projects an enormous amount of self-confidence. During his flawless campaign, he spoke repeatedly about knowing both the problems and the solutions, given his 15 years on City Council. But that was yesterday, as a candidate. Today he is mayor-elect, beginning the process of assuming the leadership of the nation's fifth largest city.

Mayor-elect Nutter has two key advantages that no other Philadelphia mayor has had.

First, he's had plenty of time to prepare for office. He's been a lock ever since he won the Democratic primary six months ago. With another two months to prepare (the normal time for other mayor-elects), he should hit the ground running.

His second is that he follows John Street. Street has accomplished way more as mayor than he'll ever get credit for. But he failed to grab hold of a mayor's most potent tool - the public megaphone. He's a reluctant communicator and civic cheerleader.

Street had the misfortune of following the city's all-time great communicator, Ed Rendell, who courted the press, worked the room and, if need be, jumped in a pool or cleaned the City Hall latrines to make a point.

If Street was disadvantaged by following Rendell, then Nutter, who can fashion a sound bite with the best of them, is blessed by succeeding Street.

How an officeholder relates to the press and public shapes opinion even more than the facts. Take the city's homicide toll. I bet the vast majority of Philadelphians would say the total is greater under Street than under Rendell. But they'd be wrong.

In six out of Rendell's eight years, homicides topped 400. Last year was the only time under Street that it hit 400. (This could be the second.)

And remember law-and-order Mayor Rizzo? With 1,000-plus more cops on the force, the average homicide total during his era was 10 percent higher than in the Street years. In four of Mayor Rizzo's eight years, there were more than 400 homicides.

(For details, visit my blog, philgoldsmith.blogspot.com.)

But regardless of how well a mayor communicates, the underlying facts and policy challenges remain. To best describe the challenges facing Mayor-elect Nutter, let's look at what happened to two major city departments over the last three decades.

In 1975, the Streets Department employed 3,700 people. By 2007, the department was half of what it was, with 1,814 workers.

Now take the city prison system. In 1975, they employed 868 people. Today, it's 2,156, a whopping 150 percent increase.

Is it any wonder, as Nutter observed during the campaign, how dirty our city is? There are many reasons for our littered city, but we can't ignore the fact that virtually every function in the Streets Department has been whacked over the decades.

But Streets isn't the only service department to lose hundreds of employees over the years. In 1975, the Rec Department had 810 employees. Today it has 460, a 43 percent decline. Fairmount Park has gone from 381 to 155, down 60 percent. L&I, responsible for building safety and processing business applications, has been reduced 35 percent, 542 to 351. The Health Department has lost 20 percent in 12 years as its health centers have been the primary care-provider of last resort.

Granted, some reductions are due to contracting-out or shifting functions to other departments. But the trend is indisputable. Even if you take into account the population loss over the last 30 years, the number of employees per capita has decreased.

But with a poorer, needier population, some departments have exploded, like prisons and the Department of Human Services, the DA's office and the courts.

IN addition to the demands of poverty, increasing health and benefit costs have eaten into the city's operating departments. Add in the tax cuts scheduled over the next five years, which will deplete the treasury of an added $455 million, bringing the total to more than $1.6 billion since the tax-reduction strategy was initiated 10 years ago.

In short, Nutter will inherit a government whose capacity to take care of basic services, the essence of city government, has shrunk. The victims are largely the middle class, many of whom have already fled to the suburbs.

We are doomed to become a city sharply divided between rich and poor unless we focus on keeping the middle class of all races in Philadelphia. It won't be easy. It means delivering more with less and changing the way we do things.

It's been more than half a century since Richardson Dilworth and Joseph Clark delivered reform with a new City Charter and civil service system. but yesterday's reforms are now today's straitjackets, made even tighter with onerous work rules.

Michael Nutter is now positioned to usher in an era of genuine change. He's run as a reformer. He's smart and energetic. He won the key election, the primary, not beholden to unions or party bosses. And over the last several months, he's amassed a sizable financial war chest to make him even more independent.

Yes, there are high expectations for our new mayor to be.

And for good reason. We expect a lot. And we need it. *

Phil Goldsmith was the city's managing director. E-mail pgold4110@aol.com.