CHICAGO - Chicago Mayor Richard M. Daley kicked off his bid for a second full term in office yesterday, staking his campaign on a pledge to fight crime and improve the city's neighborhoods.

In announcing his candidacy, Daley also offered his credentials as a fiscal conservative, noting that "we've cut bureaucracy at city hall by 1,600 positions and held down property tax hikes for city government to less than 5% in six years."

The Chicago Democrat gained office in a 1989 special election and has won praise for privatizing many city services and luring the 1994 World Cup and 1996 Democratic National Convention to the city.

But he has failed to follow through on several pet projects, including largely bond-financed construction of a third airport on the city's southeast side and construction of a casino gambling complex on the lakefront. Critics have also said that he has been reluctant to lobby Illinois lawmakers on urban issues.

He pledged yesterday to be more aggressive in the state capital now that Republicans control both houses of the general assembly and the governor's mansion.

But he did not say how he would lobby state lawmakers to help alleviate a looming financial crisis in the city's public schools. Last February, a financial oversight authority for the Chicago Public Schools had to issue $410 million of general obligation bonds to bail the school system out of a budget shortfall through fiscal year 1995. For fiscal 1996, city, state, and school officials are expecting a $325 million budget deficit when the bond proceeds run out. The school's current fiscal year began on Sept. 1.

"On the public schools, this is the year for frank discussion, not just about funding but about performance and accountability. There are a lot of suggestions on this issue, and there will be open debate on this," he said.

Daley has already taken the offensive in the state capital. Last month he took his first trip as mayor to Springfield to push for anti-crime legislation to help the city.

The mayor has made the bill and other crime-fighting measures as the centerpiece of his reelection platform. He said that during his tenure, city officials have seized and destroyed 80,000 illegal guns, added more than 1,000 police officers to the force, launched a community policing initiative, and put metal detectors in the schools.

But Daley was not forthcoming on his plans to ask state lawmakers to authorize a casino gaming complex on the city's waterfront. His aides have said the casinos would be financed with $800 million of revenue bonds. The legislature rejected his overtures last summer, and Republican leaders have signaled they will not approve Chicago riverboats unless the General Assembly passes a number of business-oriented reforms.

Daley's relations with Cook County officials are much better than those with state lawmakers. He was an early supporter of Cook County Board president John Stroger, a Democrat, who was sworn in this week as the first African-American to hold the office. Daley's brother John, also a Democrat, was elected to chair the Cook County Board Finance Committee this week.

Daley won his first mayoral election after an acrimonious three-way race that split the city along racial lines. He maintained yesterday that he has ended the bitter racial tension that developed when his father's death left a political vacuum in city hall. The younger Daley was surrounded by minority supporters when he announced his reelection bid yesterday.

But Daley faces challenges from at least two minority candidates. Joseph Gardner, commissioner of the Metropolitan Water Reclamation District of Greater Chicago, is contesting Daley in the Democratic primary Feb. 28. And departing Illinois Attorney General Roland Burris has said he will run as an independent against Daley in the general election, which is set for April 4.

After last month's GOP landslide, five candidates have asked for the endorsement of the Cook County Republican Party. The party decided this week not to endorse any of the candidates. Businessman Nino Noriega and United Republican Fund chairman Larry Horist are considered the leading GOP candidates.

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