Mayor Mufi Hannemann will outline his plans to deal with the city's economic challenges during his fifth State of the City address today in the Mission Memorial Auditorium near Honolulu Hale.

City officials, like their state counterparts, face difficult decisions in the coming months as they attempt to keep budgets balanced amid stiff economic headwinds. Right now, nobody's ruling out tax hikes and fee increases as a means of filling an estimated $13 million to $40 million deficit in the fiscal 2010 budget year, which ends on June 30 of next year.

Hannemann has forecast a deficit of up to $100 million in the fiscal 2011 budget.

"We all know that our economy has declined and many people are suffering," Hannemann said in a news release. "We also know that it will take leadership, hard work and effective collaboration to bring about the solutions our community needs."

The city's budget negotiations begin in March, when the mayor rolls out his proposed budget.

Apart from the budget, Hannemann today likely will address other city issues such as solid waste disposal and wastewater treatment, and provide an update on mass-transit plans, including the planned $5.4 billion elevated commuter rail.

U.S. Sens. Daniel K. Inouye and Daniel K. Akaka are scheduled to attend, along with other leaders from government, business, labor and education.