Mayor Mufi Hannemann's "State of the City" address yesterday started with his now-characteristic turn at karaoke singing and a metaphor for shared sacrifice — the "stone soup" fable — but quickly got down to the meat and potatoes. The financial meltdown, and how it affects the city, certainly inspires more tears than songs.

Or, perhaps this stark reality is precisely what the mayor meant by his rendition of "Welcome to My World."

The city is facing a $50 million shortfall for the next fiscal year, and expects revenues for the following year to decline even more, resulting in a deficit three times as bad.

That's the world of municipal bill-paying these days, one made a little easier in the short term by the money set aside for Hawai'i in the federal stimulus package.

It's critical that the funds speed their way into the local economy, and Hannemann sounded the right note by outlining a plan for efficiencies in permitting and city government generally, austerity programs and cooperation among the county and state agencies.

In particular, the streamlined, one-review permitting process for stimulus projects is a welcome one. Elements of that streamlining, particularly the city-state collaboration, should yield lessons that ought to carry over into city business permanently.

It would be good to see efficiency paired with public accountability, with a Web tracking site or other means of keeping the public informed of progress. This should apply to the stimulus funds especially, since there is a drive to pump jobs and revenue into the economy on a timely basis. But transparency measures also should apply to rail project contracts, with the first due to be issued in coming months.

Federal economic constraints, and the recovery plan passed to soften the blow, affect virtually every aspect of the city's own emergency response. City employees, from the top down, are forgoing pay raises; the mayor's cabinet joined in with a voluntary furlough that amounts to a 5 percent cut.

Hannemann has promised to convene nonprofits, which are also suffering through the downturn, in an effort to patch together a social safety net of programs, using community development block grants and shared resources. That's an encouraging development.

The city's grim fiscal outlook also has added to the urgency of its negotiations with the Environmental Protection Agency over its order to upgrade offshore sewage treatment plants. The city must redouble its effort to broker the best solution possible for taxpayers. The state should lend its support by aligning its water-quality criteria with current standards; that may help the city reach a livable settlement of the court challenge by environmental groups.

Among the other key points in the address:

• Hannemann wants to establish a city-state center in Kapolei, which would be a good use of land that's recently become available, serving Leeward residents who could use access to government services closer to home.

• An alliance is forming among the counties as purchasing partners, in an attempt to save taxpayer dollars through economies of scale. That's a promising idea.

• The mayor is seeking public input on proposals to pare down the number of neighborhood boards and to merge the fire and emergency medical service departments. As cost-saving approaches, these are worth exploring.

Ultimately the success of the plan Hannemann presented depends on a more collaborative spirit among public agencies at every governmental level.

If the unifying force of impending fiscal collapse can produce this kind of accord, that would be a silver lining in this very dark cloud.