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Mayor Harold Washington`s unfinished agenda of budget restraint, political reform and economic revival will suffer rejection and temporary setbacks without his strong political presence, observers predicted Thursday. While the day-to-day workings of city government will carry on whoever emerges as the next mayor, an unfettered City Council can be expected to resist key elements of the late mayor`s agenda, with legislative initiatives labeled ”reform” high on the aldermanic hit list.

Looking into next year, administration officials had high hopes of exerting increased influence in Springfield on issues critical to the city`s future like education reform and tax measures to aid the city. The prospect of political upheaval locally lessens the possibility.

The city may also lose ground in the national arena. Washington had hoped to play a key role in next year`s presidential election, although his efforts to champion federal aid to the cities for housing, urban development and infrastructure improvements like mass transit had fallen on mostly deaf ears in Congress.

The first casualty from the Washington agenda is likely to be the $84 million property tax increase contained in the administration`s proposed $2.7 billion budget. The budget was already in trouble with several key administration allies, including Interim Mayor David Orr (49th) and Ald. Lawrence Bloom (5th), Budget Committee chairman.

Other tax-conscious aldermen are preparing to line up next week with amendments to slash the budget beyond the estimated $10 million cut already under consideration. Anti-administration aldermen, led by Ald. Edward Burke

(14th), could be joined by former administration supporters who fear a taxpayer backlash and are wary of their own political futures without Washington`s support.

Both pro- and anti-administration aldermen on Thursday expressed confidence a balanced city budget would be passed by the year-end legal deadline. But new jobs sought by the administration for the Law, Purchasing and Revenue Departments, which officials argued will improve the long-term efficiency of City Hall operations, may give way to a budget that looks more like a Christmas tree for aldermen looking out for their ward organizations.

”Passing a new budget certainly will be more difficult without that firm support that the mayor offered,” Bloom said. ”I`m worried that everyone will have their own pet things, either to cut off enemies or increase salaries to friends.”

Politically pragmatic aldermen also are expected to shelve controversial measures favored by the administration that offended large voter blocs. The gay rights ordinance, deregulation of the city`s taxicab industry, a stricter ethics code and installation of lights at Wrigley Field are in jeopardy.

”There`s a good possibility there won`t be the votes to pass the

(Wrigley Field lights) amendment,” Ald. Bernard Hansen (44th) asserted.

”Maybe people will realize it`s a neighborhood issue and not a citywide issue.” City Hall insiders said that Hansen can be expected to trade his vote on the next mayor for a promise to scuttle the lights bill.

The gay rights ordinance was overwhelmingly rejected in 1986 when supporters could only garner 18 votes despite Washington`s endorsement. The mayor`s death ”is a setback, I hope not a total setback,” said Stuart Michaels, cochairman of the Lesbian and Gay Progressive Democratic

Organization. ”Whoever emerges as mayor, even if he supports the ordinance, it will be a long time before he has the clout that Washington had.”

Supporters of increasing the number of taxi licenses in the city expressed hopes that enough work had been done to gain approval from the council. ”I think the council will pull together, but this will be on the back burner for several weeks,” said Robert Rose, with the Committee of Concerned Cab Drivers, part of a larger taxi coalition.

Pending amendments to dilute the existing ethics ordinance received new impetus. A key plank in Washington`s re-election platform, an ethics ordinance was passed in the council this year chiefly because the vote came days before the aldermen themselves faced re-election. Since enactment, aldermen on both sides of the aisle have sought to stall enforcement and weaken the code.

The picture is somewhat rosier for the late mayor`s development agenda, although political uncertainty could add new delays to some of the projects.

Administration officials on Thursday expressed confidence the new library, stadiums for the Bears and White Sox and continued redevelopment of the North Loop would continue to move forward.

”The library is funded, an ordinance and a design jury people can`t quarrel with are in place,” said Planning Commissioner Elizabeth Hollander.

”I see no reason why it can`t move forward.”

A key test of that assertion will come next month when a technical amendment allowing variable rate financing on the $175 million library bond issue comes before the council for approval.

The loss of the mayor`s clout could affect the stadiums, however. One version of the federal budget bill eliminates tax breaks on revenue bonds for the two projects, and U.S. Rep. Dan Rostenkowski (D., Ill.), chairman of the House Ways and Means Committee, holds the key to their survival.

Other development goals of the administration, including the creation of a protected manufacturing district along Clybourn Avenue, establishing industrial parks on vacant land and redrawing the zoning code for the entire city, are less certain without Washington`s strong commitment to an active industrial policy for the city.

”The mayor`s support for these things was very important,” said David Mosena, deputy commissioner of planning. ”While there`s reason to believe these efforts can continue, it will depend on who takes over and whether they seek adjustments.”

Perhaps the greatest challenge to Washington`s supporters will be to carry on his nascent effort to reform the city`s schools. Washington and his aides recently named 50 parents and other citizens to lead a series of neighborhood forums and chart a course for change. In his last interviews, the mayor repeatedly vowed to lead a legislative charge in Springfield and Washington to fund a reform program.

”We`re going to be hard pressed to replace that kind of influence,”

Interim Mayor Orr said.