His performance dealing with another problem - high taxes - has not been nearly as spectacular.

After five years of modest trims in wage and business taxes, Philadelphia remains one of the most heavily taxed cities in the nation. Even with the economy booming, job growth in Philadelphia has been minimal and residents are leaving at a rate faster than in any other major U.S. city. Many experts say taxes are a major reason.

"Philadelphia is stagnant," said Basil Whiting, an urban affairs consultant who recently studied Philadelphia for the Pew Charitable Trusts. Rendell's strategy of making the city a tourist destination "has been intelligent for the short run because it keeps the wolf away from the door," he said. "But business is not going to move into Philadelphia because of the tax structure."

The major candidates for mayor, Democrat John F. Street and Republican Sam Katz, both say city taxes should be cut. Where they differ is on how fast and how deep.

Street, the former City Council president, says the cuts should be gradual and modest. He favors continuing Rendell's program of very small yearly trims in wage and business taxes. Street, Rendell's partner in shaping the city's fiscal policies during the '90s, shepherded those tax cuts through Council.

Cutting taxes too much would be dangerous, Street said: It could push the city budget into the red and require cuts in services that would make it even harder to retain residents.

Katz, an entrepreneur and financial adviser to governments and businesses, contends that time is running out on the go-slow approach. He says that, if elected, he would push for deeper, faster cuts - reducing the wage tax from its current 4.61 percent to 4 percent or less by 2004.

Tax cuts on that scale would cost the city hundreds of millions of dollars a year in revenue. Katz has not spelled out how he would balance the budget without that money. The answers, Katz said in an interview, will be in a financial plan that he will release shortly.

Robert Inman, professor of economics, finance and public policy at the Wharton School of the University of Pennsylvania, said the two candidates were "speaking the right language" on taxes.

He estimated that Rendell's modest tax cuts were responsible for about 1,000 of the approximately 10,000 jobs created in the city over the last three years.

Sharper reductions would lead to more jobs and would make the city more attractive to residents thinking of leaving, Inman said.

The wage tax, paid by Philadelphia residents and by suburbanites with jobs in the city, is the city's major source of cash, bringing in more than $900 million a year - 53 percent of all city tax revenue.

The business-privilege tax brings in about $245 million a year - 15 percent of all tax revenue.

The wage tax rose steadily in the 1970s and early '80s as mayors tried to patch bigger and bigger holes in the budget. When Rendell took office in 1992, the rate for city residents stood at 4.96 percent, the highest in the country. (By state law, suburban commuters pay a lower rate.)

Most suburban communities have no wage tax, so people who live and work outside the city can escape such local taxes entirely.

Beginning with the budget adopted in 1995, Rendell and Council took small slices out of the wage tax each year, shaving it to its current 4.61 percent for Philadelphia residents and 4 percent for suburbanites.

Deeper cuts were made in the business-privilege tax, a levy on revenue and profits paid by thousands of Philadelphia businesses.

The total reduction in the wage tax since 1995 amounts to just 7 percent, leaving the city with a heavy tax load that gives families and businesses a strong incentive to move out.

A typical family in the region - one with a median income of $40,000 and a house valued at $120,000 - would save about $2,300 in taxes each year by moving from the city to the suburbs, according to calculations by Inman using 1997 figures.

A typical small business - one with yearly revenues of $4 million and profits of $323,000 - would save about $11,600 a year by moving, Inman said.

Street, who became an expert on city finances during nearly 19 years on Council, said the city simply could not afford deep tax cuts without layoffs and severe cutbacks in services.

"Everybody is looking for the silver bullet: 'If I search around long enough I'll find it,' " Street said. "Well, it's not there. If it was there, we would have found it."

He supports sticking to the gradual approach, outlined in the city's current five-year financial plan, that would bring the wage tax down to 4.46 percent by 2004.

The gross-receipts portion of the business privilege tax would be cut nearly 19 percent by 2004 under the five-year plan. That would bring the total reduction in that tax since 1995 to about a third.

The gross-receipts levy is regarded as hurting young companies because it taxes them on gross revenue before they are earning profits. Suburban counties and towns do not have such a tax.

Street said stability in taxes and in the city budget was more important than dramatic tax relief.

"People want a reasonable expectation that government can do what it says it can do," he said. "Predictability is very important. . . . They hate spikes or radical changes of any kind. . .People would rather understand there will be a steady decline and they can project and budget."

Street said he had "experience dealing with the business community in this city. And they don't want us to be unreasonable. They don't want us to be wildly optimistic. They want us to be realistic."

Katz contends that the wage tax could be reduced below 4 percent. He says the business privilege tax, including the gross receipts portion, should be virtually eliminated.

Rendell took a "little nick off the wage tax" and "I'm going to take a bigger little nick," Katz said.

Katz said his goal was to put the city on the same footing as suburban communities in terms of taxes.

"We will get to a place where [Philadelphia is] going to be more competitive," he said. "Where the tax issue - not the schools issue, not the quality-of-life issue, not the bucolic-nature-of-Chester County issue - but the tax issue ceases to be so widely disparate."

Katz said that the time is right for the city to move aggressively to level the playing field with suburban communities.

While city taxes are slowly declining, suburban taxes are creeping up. In some inner-ring suburbs in Delaware County, local taxes already are higher than in Philadelphia, said Inman, the Wharton professor.

As suburban counties grow, their governments are being forced to add or expand services, such as paid fire departments, street cleaning, police and prisons. Higher taxes will be needed to pay for it all, Katz said.

"As you converge into the year 2010, Philadelphia is pressing its rates down and the suburbs - because their growth rate is flattening out - will be raising tax rates," Katz said.

To offset the loss of revenue from the deeper city tax cuts he proposes, Katz said he would tell city employees "to manage with less."

"I've been trying to tell people at city employee unions that this boat is sinking," he said.

Katz said his administration would also impose tougher management oversight in city departments, offer financial incentives for cost cutting, judge the city against private industry standards and streamline civil service classifications. These are all steps tried under Rendell, with varying degrees of success.

"People want this to be a city where there will be opportunity for their kids," Katz said. "People want to know where they fit into the economic ladder. As long as people are employing and building business, there may be a spot for them."