WHEN CITY Council broke a year ago this week for a three-month recess, Mayor Nutter was enjoying a political honeymoon after his first budget passed with ease, and the city was well on its way to nailing down one-year contracts with the four municipal unions.

One year and one worldwide economic calamity later, Nutter faces a very different summer. Council heads off today for another break after dealing the mayor a stunning political loss on how to close a $1.4 billion gap in the city's five-year financial plan.

If the typically fractious Council found unity, it can thank Nutter for the outrage he sparked during his budget address in March, when he railed about city-issued cars and the controversial Deferred Retirement Option Plan (DROP).

Councilman Bill Green characterized Nutter's opening budget moves as an "attack."

"I think it was a surprise that basically the approach started out as confrontational rather than, as the mayor likes to say, 18 people pulling the boat in the same direction," Green said.

The budget compromise that Council forced on Nutter in May puts more of the city's fiscal future in the hands of the Legislature.

Any approval of city finances by the state would have to be part of a larger state budget, now the source of a rancorous battle between Gov. Rendell and legislative Republicans over budget cuts and a proposed increase in the state income tax.

Without that approval, the city will have to make local budget cuts that Nutter calls "dire," including police layoffs, further elimination of Fire Department equipment and a reduction in trash pickup.

"We may be back here in August," Councilman Jim Kenney said about the potential need for another budget. "Who knows?"

While waiting for Harrisburg to approve a 1-cent increase in the city's sales tax and changes to how the pension fund is replenished, Nutter is seeking $125 million in concessions from municipal unions. The city's largest union, District Council 33, won't even meet with negotiators if contract cuts are proposed.

Here's a run-down on Nutter's clashes with Council this year:

_ The city budget - Nutter proposed temporary property-tax increases of 19 percent on July 1 and 14.5 percent next July. Council countered with a 1-cent increase in the sales tax for five years. That tax now is 7 cents on the dollar, with 6 cents going to the state and 1 to the city.

The city needs General Assembly approval for that and for changes to the pension fund - deferring contributions for two years and stretching out payments to 30 years rather than 20.

Nutter surrendered on the property taxes in May, saying that the legislative process had worked.

_ Council cars - In his budget address, Nutter said that the city wanted government to "tighten its belt" while noting that he had trimmed the city's fleet of cars.

The message was clear: Council should follow the example. Thirteen of Council's 17 members were driving city-issued cars.

The response was just as clear: Council Majority Leader Marian Tasco said that she was keeping her city car and wanted a replacement for the five-year-old model.

_ DROP - Nutter vowed not to enroll in the controversial program, which allows city employees, including elected officials, to set a retirement day four years in the future and then accrue pension payments at a fixed rate to be collected upon retirement.

A program loophole allows Council members to run for re-election, retire for one day to collect a big lump sum and then return to work. Tasco and Council President Anna Verna, who are both enrolled in DROP, did not appreciate Nutter's intentions. Verna said that she was "entitled" to DROP.

"We are being told it does not take a nickel out of the general fund," Verna said after Tasco railed in a March Council session about DROP coverage. "It is our money that is being invested." *