Saying Pittsburgh has "an obligation to the residents of our city to solve the problems we face together, as a family," Mayor Luke Ravenstahl outlined his plans today to advance the city in the face of the economic downturn, and called for unity as he approaches a city election year.

The occasion was the release of his proposed 2009 budget to city council. The $438 million spending plan and an outline of the $45 million capital budget have already won the approval of state overseers, giving council room to do little more than tinker.

It comes as the state makes broad cuts and the city of Philadelphia guts recreation and libraries in response to tough economic times, but includes nothing more dramatic than the elimination of 65 already-vacant positions.

"We've done more than Philadelphia and the state have done before today," Mr. Ravenstahl said. "We've made our cuts last year, the year before, and the year before that, in going through [state oversight]. So if I thought there were more ways to cut and more things to cut, certainly we would do so."

Instead, taxes will go down. The parking tax will drop from 40 percent to 37.5 percent, and a sliver of the wage tax will be shifted from the school district to the city -- both changes mandated by the state Legislature in a 2004 tax shift.

The city will take a savings account that is expected to approach $100 million by year's end and put nearly half into a fund that can be used only to pay off debt. Setting aside that money in effect lowers the city's debt to less than $700 million, down from $860 million five years ago.

Another $27 million from the savings account will go toward capital needs, one of several steps meant to allow the city to go without new borrowing until 2012 and cut its annual debt payments -- now around $85 million -- in half by 2017.

That leaves the pension fund as the city's biggest fiscal problem. At mid-year it contained just $330 million of the $899 million it should ideally hold, and the situation has worsened due to stock market losses, Mr. Ravenstahl said, without releasing an updated balance.

The fund's loss has "been pretty significant," Mr. Ravenstahl said. "It's no surprise, really, that the downturn and the situation in the country has affected our pension fund as it has affected pension funds throughout the country."

The pension deficit "is going to be the number that eats the city alive," said Council President Doug Shields.

The budget calls for adding 5 percent more than the state-mandated minimum to the troubled pension fund.

Controller Michael Lamb said he wished the mayor had stuck with an earlier pledge to add 15 percent more than the minimum, but was happy that the budget does a lot to pay down debt.

"We're not immune from the global economic crisis," he said, adding that revenues have not slumped yet. "Pittsburgh has weathered the economic storm pretty well."

Council Finance Chair William Peduto called for a plan to "restructure what city government is, completely," saying that should include merging computer systems, parks, public works and some public safety functions with Allegheny County.

Mr. Ravenstahl used his first speech since the birth of his son and the election of Barack Obama to the presidency to refer to both, and to outline the initiatives and successes of his 26 months in office. He made references to hokey men, beat cops, bike racks, street trees, new garbage cans, a splash park, and the Pittsburgh Promise that is helping some 800 public school graduates to pay for college.

He faces the voters in the May Democratic primary, though it is not yet clear whether there will be a prominent challenger.

"I think that we have a good story to tell, as we briefly did it today in the budget address," he said. "And I think the people of Pittsburgh, if they have the opportunity to take a look at the successes, will be relatively pleased with what we've been able to achieve in a relatively short period of time."

More details in tomorrow's Pittsburgh Post-Gazette.