The city has taken a look "down the road," as the mayor said in his State of the City address last week, and if the immediate budgetary picture is bleak, the sight up ahead is downright scary.

Mayor Mufi Hannemann this week broke the bad news to taxpayers that they'll likely be hit by an array of tax and fee increases in the coming fiscal year to overcome a shortfall of about $50 million. And that deficit had been even larger before the administration struck 806 funded positions from the city ledger, reduced managerial pay and made other cuts.

What's far worse is that, even with new tax increases continuing into the 2011 budgetary year, a deficit of about $176 million will be left.

Beyond the dark clouds hovering overhead, it's preparing for the thunderstorm beyond that should be the focus of talks in the next few weeks between the administration and the City Council.

Future prospects are almost certain to involve some reduction in service, and minimizing the pain that will cause may take some new alliances with the private sector, even volunteerism. Coming up with the savings to bridge a huge fiscal gap will take all the collaboration among government agencies the mayor has recommended, and then some.

City department heads already have been urged to approach their counterparts in state government to explore new ways of saving through cooperative purchasing strategies, and that's a good sign.

Elected officials anticipate revenues to shrink even further in a tumbling economy and their share of the pie to shrink along with it: The city's not sure yet how much of the transient accommodation tax it will get. Honolulu leaders may have to contemplate instituting spending curbs sooner rather than later.

Ending the pilot of TheBoat's ferry service seems a given, especially if that $5 million savings would ensure a larger property-tax credit for homeowners.

Overall, the mayor made a strong case for a moderate hike in the residential property tax rate, and it makes sense that business taxpayers, who have seen their rates go up previously, should not be hit again during a downturn.

But there's a lot to discuss during strategy sessions.

For example, it would be smart to begin talks now on the proposal to establish a homeowner class for real property tax, shielding owner-occupants from some of the rising tax burden.

Beyond the modest hikes in bus fares, golf fees, zoo admissions and other general fees, the administration may later add a fee for garbage collection. That's sure to be unpopular, but careful planning could make it more palatable. Other cities charge according to trash volume; residents could then have an incentive to reduce their rubbish by recycling, and save on the fee.

Finally, it's time for the council members to cast a critical eye over the spending plan for the coming year and look for ways to trim more. It might be time to resurrect the mayor's old narrative about "need to have" versus "nice to have" items, and apply that rigor to this budget.