While Mayor Mufi Hannemann may sing a happy tune at his annual State of the City address tomorrow, his speech will likely have some somber tones.

Hannemann, who calls himself the “;singing mayor,”; is expected to highlight the city's budget deficit and solutions to address the shortfall that could be as high as $40 million this year.

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

Hannemann's aides have been tight-lipped about his upcoming speech at the Mission Memorial Auditorium next to Honolulu Hale, but several City Council members expect it to focus on the sour economy.

“;The budget and the economy is front and center,”; said Councilman Duke Bainum. “;We have to make up the shortfall and not let it fall on the backs of our taxpayers.”;

While Hannemann has until March 1 to send his version of the city's budget to the City Council, he may hint at his plans - including whether to raise real property tax rates.

“;It's a depressed economy, assessments are low, but (raising) property taxes is always the last option,”; Hannemann said in a recent interview. “;Our budget is very challenging.”;

“;We're looking for revenue-generating ideas that will help fill our city coffers. We're trying to see to if we can introduce some new fees,”; he said.

Hannemann said earlier this year that the city is facing a budget deficit ranging form $13 million to $40 million in the upcoming fiscal year. For July 2010 to June 2011, though, the deficit could be as high as $100 million, he said.

Politically, 2009 may be a better year to increase rates because there is no election. Hannemann has said he is open to running for higher office - governor or Congress - in 2010.

“;Hawaii politics is filled with a history of people looking at election cycles rather than the economic cycles,”; Bainum said. “;I'm hopeful that Mayor Hannemann will rise to the occasion and do the right thing, not only for this year's budget but for next year's budget.”;

Hannemann's speech begins at 10 a.m. and will be broadcast on Olelo Community Television on Channel 54. Special guests expected to attend include U.S. Sens. Daniel Inouye and Daniel Akaka.