PITTSBURGH -- City Council gave narrow preliminary approval Wednesday to the Act 47 financial recovery plan, which includes a big hike in the yearly occupation tax, a two-year freeze on city workers' wages and larger health care contributions from city employees.

Read The Full Act 47 Plan Discussion:Your Thoughts On Act 47

Channel 4's Bob Mayo reported that the vote was 5-4. Council members will meet again Tuesday and take a final vote.

Under the proposal, anyone who works in the city of Pittsburgh would pay an annual $145 tax, up from the current $10 fee, and a payroll tax would be instituted on for-profit businesses. Both of those taxes require state approval before taking effect.

The plan calls for $33 million in spending cuts and layoffs. That includes a 20 percent cut in the Fire Bureau and 15 percent cuts in the offices of City Council, Mayor Tom Murphy and Controller Tom Flaherty.

Public Financial Management, of Philadelphia, and Eckert Seamans Cherin & Mellott, of Pittsburgh, were appointed by the state to put the plan together after Pittsburgh was declared financially distressed late last year.

Union leaders immediately blasted the preliminary vote.

"It's destruction, people," said Joe King, president of the city firefighters' union. "This is bad, and I, my members, my men and women are going to do everything humanly possible to stop this darn thing from happening."

"It really stinks," said Fred Bell, who represents city mechanics. "It puts a hammer on the unions' heads and gives the mayor's office an incentive not to bargain in good faith."

Council members agreed that the proposal is far from perfect.

"This plan fails to recognize that vital city services have already been cut too far," Councilman Len Bodack said. "Public works, parks, police and planning services have taken a terrible beating in the past year."

"It actually crosses the line and goes over and breaks a lot of agreements in all the unions throughout the city, and a lot of it's not necessary," added Councilman Jim Motznik.

But Jim Roberts, one of the Act 47 coordinators, warned that the city's situation is too dire. He said action must be taken now.

"It's 2004 and the city is out of money," Roberts said. "We don't have time to sit down, turn this plan down and sit down with the Legislature."

Council President Gene Ricciardi agreed, saying that even though the plan calls for cuts, it will help the city avoid a bankruptcy that would cost even more jobs.

"Let me tell you, in the long run, we're going to be protecting jobs, protecting benefits, protecting pensions," he said.

"If you think the recovery plan is strong medicine, you ain't seen nothing until you see what a bankruptcy court can do to this city," Councilman Sala Udin said.

Watch Bob Mayo's LIVE report tonight on Channel 4 Action News at 5 p.m.