Republican mayoral candidate Sam Katz's long-awaited plan to reduce the wage tax is full of phrases like "performance measures" and "outcome-based budgeting." The plan itself might be labeled "Faith-Based Tax Cutting."

Either you believe that a bright, determined guy can import some sound management principles from other cities and save a ton of money in Philadelphia's bloated government, or you don't.

Katz resolutely avoided saying where he'd get the hundreds of millions in savings he'll need to make his deep wage-tax cuts, insisting that an incoming chief executive brings vision and will, not details.

But a potential credibility problem for Katz emerged last night, as Democratic opponent John Street issued a letter charging that Katz's numbers drastically understated the cost of the tax cuts, both his own and Street's.

The Daily News independently discovered the discrepancy in reviewing the Katz plan, and came up with numbers that matched Street's before he issued his challenge. Katz's campaign staff was sticking by its numbers.

The idea

Other cities, Katz said, have managed to cut budgets, reduce taxes and improve services, all while giving their workers reasonable wage increases.

Among the guiding principles of the new thinking are performance measures and outcome-based budgeting. In Philadelphia, the plan argues, city departments are given money and told to spend it carefully, but the results of their efforts aren't even known, much less scrutinized.

The city's budgeting is so crude that no one knows what it really costs to fill a pothole, run a recreation center, or do anything else.

Once the city transforms its accounting systems, real analysis will show what needs work, and what can be done better. As the plan puts it, "You cannot manage what you cannot measure. And you cannot improve what you cannot manage."

The plan proposes major investments in information technology, both to improve management and to achieve specific savings.

Katz believes the management principles, applied aggressively, could save between $100 million and $500 million a year.

It's hard to assess how these ideas transplanted to Philadelphia will take hold, but past experience suggests things like major computerization projects take time and produce uneven results.

Two examples: the city Water Department's change to monthly billing worked. An effort to computerize the city Records Department crashed.

Also, many of Philadelphia's budget-busting headaches stem from services it is mandated to provide as a county, such as courts, prisons, and child welfare programs, worries that other cities do not have.

The cost

There's a major discrepancy between the cost of the Katz tax plan and the numbers in the city's budget and five-year plan, but this much is certain: At the end of four years, the city under the Katz plan will have $101 million less to work with every year than it would with the more modest Rendell/Street cuts.

In city services, that buys a lot.

It's roughly the cost of the combined budgets of the Free Library, Fairmount Park Commission, the Recreation Department, and the office of services to the homeless.

On the other hand, it's only about 31/2 percent of the total city budget, which doesn't seem quite so daunting.

The problem is that the $101 million per year is only the difference between the Rendell/Street plan, which includes its own business and wage tax cuts, and the Katz plan.

It's on the cost of the Street/Rendell tax cuts that Katz's numbers differ sharply from city budget figures. City budget figures show that the Street/Rendell wage and business tax cuts will cost another $62 million a year by the end of Katz's first term, or a cumulative $158 million over four years. Katz's tables put the figure at far less.

And as the state oversight board has pointed out, there are major challenges in achieving the Rendell/Street cuts. That plan has some major holes of its own, including $60 million in unspecified savings over four years, and no provision for any wage increases for city employees.

Looking at that oversight board's review of Rendell's last five-year plan, a fiscal conservative could argue that Street himself has overly ambitious tax-cutting goals. Whatever Street's challenges, Katz's has all of them and then some.

The politics

Katz doesn't need legislative approval to do what he proposes, but it could enrage Republican lawmakers from the suburbs who hate the wage tax, and the wage tax differential. They threaten from time to time to repeal the law enabling the city to levy a nonresident wage tax, which would kick a huge hole in the city's finances.

As a Republican, Katz has party ties that might help calm the suburbanites, and he can at least point out that he's not raising any of their taxes.

Some of Katz's management reforms could create tension with city unions and might require changes in the city charter. And Katz won't have the advantage Rendell had in 1992 of a grave financial crisis which created a strong public consensus for change.

If he wins, Katz would have the bully pulpit the mayor's office brings, and he'll argue that the city continues to lose population and that urgent action is needed to stem the flow.