The city’s finances are starting to show new signs of a weakening economy.

After holding up well for most of 2008, sales tax collections in the first quarter of 2009 have fallen by about 2.5 percent from the same period a year ago, according to the city’s most recent financial report.

But the latest numbers aren’t yet a sign that the city will have to make a series of midyear budget cuts to make the city’s books balance.

“I’m pretty optimistic, based on what we see right now, that we’re not going to need to make any mid-course corrections,” Chestnut said. “The main reason is we’re being very vigilant in our spending.”

In the past two years, the city has made midyear adjustments that have affected social service funding and other city services.

The latest report shows that the city is in a better position this year to deal with revenue shortfalls because city departments have been spending less than their budgets allow. Through the first quarter, overall general fund spending totaled $11.7 million, down from $12.1 million in 2008.

“If we need to make midyear budget adjustments, we can do that,” Corliss said. “But the good news is that we’re moving into 2009 in better shape than we had budgeted for.”

The city likely has at least one more budget bullet to dodge. Chestnut said city leaders are becoming increasingly concerned that the state may again consider keeping about $1 million in liquor tax revenues that currently are slated to be distributed to the city.

“That number is so large that if we lose it, we would need to look at second-half budget reductions,” Chestnut said.

Corliss’ office previously has proposed a series of cuts including elimination of school crossing guard funding and reductions to many parks and recreation services to deal with the shortfall. But whether city commissioners would approve those cuts or create a new list is uncertain. The cuts were criticized by some candidates during the recent City Commission elections.

In other news from the city’s financial report:

• Ridership on the city’s transit system is up, but that does not mean that the amount of money in buses’ fare boxes is growing. Despite an increase in ridership on the T of about 10 percent, fare box revenue actually declined by about 7 percent or about $5,000 for the quarter. City staff members said that’s because much of the ridership increase has come from Kansas University students, who can ride the buses for free under a new city agreement with KU.

Ridership on the city’s paratransit system — which provides door-to-door service for the disabled — has decreased by about 2 percent. That decrease has helped lead to the overall decline in revenue, since paratransit fees are twice as high as regular fares for the T.