With the distractions of a contentious primary removed, Mayor Street and City Council now must focus on a budget and five-year plan that "has real problems," according to the city's fiscal watchdog.

In a letter to the Street administration, Rob Dubow, executive director of the Pennsylvania Intergovernmental Cooperation Authority, said the city's spending plan for the next five years "is not balanced using reasonable assumptions."

Dubow noted that Street in his 2008 budget wants to spend an additional $80 million in state and federal money for a massive expansion of after-school and anti-violence programs. Trouble is that money isn't in the state budget proposal.

Street also hasn't included any money to help SEPTA or the school district get out of their budget woes, and there is no money for salary increases for city workers, whose contracts expire in June 2008.

Street is projecting to save $10 million a year for three years starting in 2010 from unspecified health-insurance changes, which can only be negotiated by the next mayor.

To get a PICA stamp of approval, Dubow said, the administration must either remove the issue from the table or show how the five-year plan can be balanced in spite of the problem.

And PICA isn't all talk. If the board rejects the five-year plan, it can withhold wage-tax revenue from the city. Such an action has never been taken since the agency was created in 1991.

The May 16 letter was directed to Street's chief of staff, Joyce Wilkerson, who could not be reached for comment yesterday.

Dubow also raised a question about the city's optimistic revenue projections, noting "the plan has the most aggressive wage-tax base- growth projections of any of the 16 plans that city administrations have prepared."

In past years, the city predicted no more than a 4 percent increase in wage-tax revenues, but Street is assuming 4.25 percent by 2009 and 4.5 percent by 2010.

The issue is significant, Dubow said, because in the past the city has been conservative in predicting revenue growth. When more money came in, it could be used to pay for unanticipated new spending.

But Street's long-term revenue forecast is optimistic at a time when each year's budget already is projected to be in deficit.

Meanwhile, City Council will face enormous pressures next week to hammer out an agreement on their idea of how the fiscal 2008 budget should look. Thereafter, negotiations will begin with Street.

The city courts, the district attorney's office, Community College of Philadelphia and advocates for public health made strong cases for more funding that could add as much as $20 million to the budget proposal.

Also, Councilman Wilson Goode Jr. will be pushing his bill that would shift about $19 million of real-estate- tax revenue each year to the school system, a move that would further unbalance the city's five-year plan and remove funds from traditional city departments. *