Boston Mayor Kevin H. White yesterday urged city politicians to fight racial injustice, and announced a fiscal "summit conference" on the effects of Proposition 2 1/2 tax cuts.

In his 13th annual state-of-the-city address, White said racism remains the city's most pressing problem, and asked the City Council to create an anti-discrimination commission.

"As long as I am mayor, we will fight against the malignancy of racial hatred in Boston," White said. "It is a battle we must fight because all of us owe a debt to our own relatives, to Irish grandfathers and Italian parents, to all immigrants who gave this city to you and me, who were themselves denied economic justice and individual dignity."

"Now, more than ever, when integration itself seems threatened with a back seat on a bus bound for the magical land of laissez-faire, a watchful nation looks to Boston," White said.

Boston's school committee--for several years the center of controversies on school busing--yesterday elected John D. O'Bryant, the only Black on the panel, as its president.

White, who was elected to a fourth term a year ago, told the audience that without substantial tax reforms, Proposition 2 1/2 would force a "virtual dismantling of local government."

Because Proposition 2 1/2 will force him to trim nearly $100 million from the city budget next year, White said Boston's city councilors, labor leaders and businessmen should join him for the summit next month.

"The people who overwhelmingly endorsed Proposition 2 1/2 last November were not voting to eliminate city services. They were not inviting us to close libraries, to padlock parks or eviscerate assistance to the elderly," White said, adding that voters were instead signaling their unhappiness with property taxes as the prime source of local revenue.